FT.com print article

Songwriters and publishers for the first time earned more from broadcasts and legal downloads of their music in 2007 than from the copyright from sales of CDs, new figures show.

Despite an 11 per cent fall in rights income from physical sales, reflecting the accelerating collapse of the CD market, the main body that collects rights on behalf of UK performers and publishers reported overall growth of 2.8 per cent last year.

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The figures show how such fees charged to broadcasters and online outlets for their use of music are becoming increasingly important to musicians and music companies.

They underscore a growing argument in the music industry that artists and record labels will have to adapt to the idea that recorded music sales – once the core of the business – will become just ancillary revenue streams.

The Mechanical-Copyright Protection Society and the Performing Rights Society, which together – as the MCPS-PRS Alliance – reap the rewards of musical creativity for UK artists, said income from broadcasting and online sources increased 7 per cent to £155.5m ($306.7m).

The money paid to copyright holders from CD sales, by contrast, fell 11 per cent from £170.7m to £151.8m. Overall income reported by the MCPS-PRS Alliance grew from £546.8m to £562.1m.

Licensing ‘not about fat cats’

The MCPS-PRS Alliance says its licensing of public music performances, from the 02 Arena to your local hairdressing salon, is “not about fat-cattery but doing something important for people who can’t do it themselves”, write Ben Fenton and Andrew Edgecliffe-Johnson.

The 2007 figures show that 95 per cent of the alliance’s 50,000 members earn less than £10,000 a year from copyright on their songs, while only 0.01 per cent, or about five superstars, earn over £1m.

Collecting societies have used such figures as ammunition in their lobbying for an extension to the length of copyright protection for sound recordings. MCPS-PRS and PPL, the other large UK collecting society, failed to persuade a Treasury review of intellectual property regulations to extend recorded music copyright in December 2006.

At the time, the Royal Society for the encouragement of Arts, Manufactures & Commerce praised Andrew Gowers, the review’s author, for resisting the “special pleading by a number of already wealthy pop stars”. In February, however, Charlie McCreevy, European commissioner, expressed sympathy with the collecting societies’ case, saying European performers should enjoy copyright protection for 95 years rather than the current 50 years.

In all, 78 per cent of the MCPS-PRS membership gets less than £1.50 a day from their creativity, with 37 per cent – 18,500 musicians – failing to register a single penny in rights payments. The bulk of the money collected goes to the big music publishing companies.

Steve Porter, chief executive, told the Financial Times: “Because we have also made our collection costs more efficient, then for the first time we have been able to distribute more than half a billion pounds to our 50,000 members.

“For us, the important thing is to be able to collect in new ways and new places to make up for the obvious decline in revenues from CD sales.”

The burgeoning live music market is also reflected in the new figures, showing a 20 per cent increase in rights collected from businesses staging live gigs and festivals. The sector now produces £17.5m in income. Money from pubs and clubs increased by 4.1 per cent to £40.4m and total public performance revenues were up almost 10 per cent at £133.6m.

Mr Porter said that despite the threat of illegal music downloading on the internet, which has had a savage impact on CD sales, there was still potential for greater growth in two areas: international usage and legal online music services such as Apple’s iTunes.

“We have had a 10 per cent increase in international collections and most of that is being generated in central and eastern Europe where collection mechanisms are getting more effective,” he said. “But of course people are banging on tables and saying we should be getting more money out of China and so on. But the fact is that if you don’t have a mature and established collecting-rights environment which says these rights have value, it’s really very difficult.

“There is no broadcast music right in China, but that doesn’t mean there won’t be one in the future,” Mr Porter said.

The alliance had set itself the challenge of finding new uses of music that had so far fallen outside the licensing net, he added, citing as examples “the birthday card that plays a song or the toothbrush that plays a jingle”.

Although online rights income increased by 54 per cent in 2007, it accounted for only £9.7m, a fraction of the value estimated to be lost by illegal downloading.

Broadcast revenues, especially in television, looked more healthy, with a 10.4 per cent increase to £89.9m. In radio, where rights are calculated as a proportion of advertising revenue, income was flat at £49.5m, but Mr Porter said he expected it to grow in 2008.

“This year we are looking for more of the same,” he added. Growth in broadcast and online is forecast to approach double-digits again while revenues from CDs is predicted to fall by 17 to 18 per cent on current trends.

PPL, the UK broadcast royalties collection society, said earlier this month that it would step up a campaign to extract more fees from businesses for their use of music, as new figures showed a 15 per cent rise in performance rights around the world.