Last Thursday, PRS reported their financial results for 2012, and the good news is that it showed revenues were up by 1.7% on the previous year.
The British songwriters’ collection society also trumpeted the 32.2% increase in royalties from online and digital services. “Royalties from online services now provide a larger income stream for music creators than radio, live or the pub sector,” the group stated.
There are, as always, numerous ways of spinning stats (note the “or” in the previous sentence is not an “and”), so DMN is digging deeper into the numbers to see what they really tell us. Sure, the increase from digital looks massive, percentage-wise, but it’s still only £51.7m ($79m) – that’s 8% out of the total £641.8m ($979m) PRS collected for its 95,000 members.
It’s also less than the cost of running PRS (which at £73m ($111m) was down 4.6% on 2011). Considering digital includes all download sales — though the report doesn’t specify how big a slice of digital revenue it accounts for — the future isn’t looking all that rosy.
Matter of fact, songwriters make three times as much from broadcasting royalties when including television, which pulled in more than twice what digital services did, at £106m ($162m). Altogether, broadcast royalties rose by 3.1% in 2012 to £153m ($233m).
It’s worth noting that international income, which is by far the largest chunk of British songwriter royalties at £180.1m, includes all sources of income, such as public performance and sales. Britain is one of only four countries in the world whose net income from music export exceeds its music import – the others being the US, Sweden and South Korea.
In reality, international represents an even greater share of British songwriter income. This is because international monies are 100% for PRS members, while broadcast collections include royalties for members of foreign collection societies.
Yet international income saw a drop of 4.1% on the previous year, due to significant exchange rate losses and the economic climate in many countries. The reason the drop wasn’t steeper was, according to the PRS, the global chart success of artists such as Mumford & Sons, Adele, Ed Sheeran and Calvin Harris “and other prominent writers seeing their music accompany television and film content worldwide”.
Omitted from the report, however, is income from synchronisation deals such as when music is used in commercials or television and film that is not covered solely by blanket licenses. These deals are on a case by case basis, and made directly between the companies using the music and the songwriters/publishers providing it.
February 19th, 2013: “Music Supervisor ‘Shocked’ That TV Studios Still Pay Labels to Use Music“
The report shows how important the European market’s respect for copyright is to British songwriters, as it represents much more than half of all international revenue at £109.7m. The revenue collected in the other continents corresponds to their lack of copyright enforcement (though the success of British songwriters, or lack thereof, in those territories of course also plays a part): the Americas at £41.7m, Asia/Australasia at £20.3 and Africa/Middle East, which only brought in a paltry £2.2m.
Royalties collected from live music performances fell by 14.2% to £19.3m, as fewer live events occurred in 2012, blamed, by some, on the Olympics. The Games and associated events did however help grow the category “other” in the public performance and live section (worth £154m) of the report to £37m. The “other” category, which pulled in almost twice what live performances did, also includes royalties from licensing in education, transport and health and beauty and holiday centres.
What is perhaps most worrying is that the songwriters’ digital share of income is lagging far behind that of recording artists and record labels.
Last year the British labels’ trade body the BPI reported that digital for the first time had overtaken physical as the biggest source of recorded music revenue, and that it represented 55.5% of UK trade revenues in the first quarter. For songwriters revenue from physical (including DVDs) remains almost twice that of digital revenue. Thanks to a 5.3% increase in revenue from CDs, physical sales brought in £102.3m, of which £80m came from CDs.
Though record labels don’t have to take on the cost of making the CDs and returns of unsold records (or, as they used to do back in the day, give the records away to stores that were selected to report to the charts, or even buy them themselves, in order to get them into the top ten), they’ve managed to grab an even larger part of the pot in the digital space. They get nearly seven times what songwriters/publishers get for a download and over twelve times more for a Pandora stream (note that in the UK radio royalties are split 50/50 between the composers and the performers).
US label executives have blamed the decline in record sales during the first quarter of 2013 on a lack of hits. They clearly understand how vital the value of strong songs is – so how come, when it comes to the digital space, they’re squeezing out those who are responsible for creating them?