Analysis

PRS for Music paid out £527.6m to members in 2016


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UK collecting society PRS for Music has announced record figures for 2016, including payouts of £527.6m to its members – the first time it’s surpassed the half-a-billion milestone.

That represented an 11.1% year-on-year rise in payouts to songwriters, composers and publishers, while the revenues collected by PRS for Music grew by 10.1% to £621.5m in 2016. Income from online platforms grew by 89.9% to £80.5m as part of that.

According to PRS, it paid out to 33% more members in 2016 than the previous year, while the number of unique musical works earning money rose by 45% to 4.2m. The society received data on more than 4.3tn (trillion) uses of music, which it notes has grown from 126bn in 2012.

PRS for Music CEO Robert Ashcroft talked to Music Ally about the growth, hailing the 33% and 45% increases in paid-members and earning-works as proof of the society’s ability to “dig in to the long tail” of that usage.

“That carries with it an underlying challenge, and that is that many of our members are receiving less money for a shorter period of time on their compositions,” he said.

“It’s still early days for us to have the analytical capabilities to do proper research on that. But it would appear to me that if you’re paying out on 45% more works to 33% more members, there is something in the idea that members are getting less per song than they used to.”

“The real question for me is the life of a song, and the fact that nowadays, so many people are listening to so much of the same music. You see the enormous hits that come from the top performers, and you can’t have those numbers at the top without having some sort of effects lower down.”

With every new announcement of impressive growth for the music industry, fuelled by streaming, comes a challenge: how does that square with rightsholders’ arguments that YouTube’s safe-harbour protections are hampering the growth of Spotify and Apple Music?

Can the ‘value gap’ argument succeed when the value of recorded music is rising sharply again?

“We tackled that one in 2014,” said Ashcroft, referring to a research paper he co-wrote with Dr George Barker that year drawing attention to what they termed the “parasitic growth” of technology companies at the expense of music.

“Apple became the most valuable company in the planet in 2013, and I would attribute their success both to Steve Jobs and to music. He got music, and music played an enormous role in driving that growth. And at the same time, recorded-music [revenues] halved,” said Ashcroft.

“So we do what we can to grow the business, but by relatively modest amounts compared to what we’ve seen as the surge in value of the technology companies since 2000. We know how important music is to YouTube, to Apple, to Amazon. Music is a driver of growth for these companies. My view is that music has an inherent value, and it should be paid at that value.”

Ashcroft also reiterated some of the concerns he expressed to Music Ally a year ago about the sustainability of the music-streaming market, particularly when it comes to pureplays like Spotify’s ability to compete with Apple, Google and Amazon.

“My abiding concern is for the structural viability of that market. I don’t think that the pure ad-funded model works, although Spotify have been quite successful in using their ad-funded layer as a funnel for their subscription service,” he said.

“We’ve not seen as much success from YouTube Red though. I would like to see people competing on a level playing field in that market. That is not to say we should be determining their business models. Everyone should be free to go to market in the way that they see fit.”

“But you can’t have one company benefiting at the expense of another because of their different business model. The cost of their inputs – music – should be the cost of their inputs!”

Ashcroft suggested that the survival of Spotify and other pureplay streaming services will be an important test for the overall music market.

“It’s a little bit of a bellwether. If you’ve got a healthy market, it should be able to sustain a pureplay company. And, indeed, several of them. If not, it is a pointer to the fact that there is something not quite working in that market,” he said.

The process of determining whether safe harbours should be reformed continues on both sides of the Atlantic. How does Ashcroft see the winds blowing in Brussels and Washington on that front?

“That is the big question right now, as you move from the logical, economic arguments we presented to the European Commission. The industry united around the concept of transfer of value: we had a clear common voice, and they [politicians] listened,” he said.

“But then you move into the political arena, and that’s a different game. It’s more about lobbying than it is about arguments. We wait with baited breath. We are hopeful that the Parliament will accept the recommendations of the Commission, and then we are hopeful that will be carried over into UK law following Brexit.”

The other topic on Ashcroft’s mind in April 2017 is a technology: blockchain. A year ago, he was expressing a cautious welcome to talk about how blockchain technology could help the music industry, while also warning against getting carried away.

Fast forward to March 2017, and PRS teamed up with fellow societies ASCAP and SACEM to launch a blockchain-based pilot, building a tool to match sound-recordings data with information on the works they are based on.

We are certainly clear now about what we think blockchain can and can’t deliver for us. Our focus is on using technology to improve the linking of sound-recording data to works data, and disseminating that around the world,” he said.

“The mismatch of links between sound recordings and works is alarming. There is an underlying truth. This is a fact: who wrote the song? This is another fact: Who published it? What are their shares in respective contracts? Who performed that song? These are facts: they should not be matters of doubt.”

Ashcroft hopes the blockchain pilot could finally soothe the fallout from the failure of the Global Repertoire Database (GRD) project, which had broadly similar aims but collapsed.

Boy oh boy, we compete with SACEM and ASCAP for members, but our objective is to make sure songwriters are adequately paid. We do not think that these facts should be proprietary,” he said. “The fact that such different societies are looking into this together is a real indicator that our support for that underlying truth remains.”

Unsurprisingly, Ashcroft thinks that collecting societies are shedding their reputation – unfair in some cases, very fair in others – for being resistant to new technology and digital business models.

He looked back to his first time at a board meeting of collecting societies body CISAC in early 2010 to illustrate the progress.

“I simply couldn’t believe we were talking about publisher access to the CISAC database, and that this was a debate that had been going on for 22 years. I was flabbergasted!” he said.

“But this week I was sitting reading the minutes of the CISAC meeting in Beijing in November, and thinking just how interesting, relevant and dynamic the conversation is now between the 20-odd societies around the world. How things have changed, although there are still some bad performers out there.”

The recent audit of Greek society AEPI and the fallout from a 2015 corruption case around SGAE in Spain were two examples cited by Ashcroft, but he was positive about the general trend.

It’s not all done, but boy oh boy is there a sea-change in attitude among the other societies! A recognition that we simply must modernise, and we must make sure the highest standards are applied everywhere.”

Ashcroft also warned of a continuing need for industry unity, even as issues like the label/publisher splits for streaming revenues threaten to open up new opportunities for music rightsholders to fall out in public.

“I don’t think that debate is going to go away. But it is an internal debate. One of the great strengths of our advocacy – with the need to address safe harbour legislation – was that we acted as an industry with a common view. We didn’t take that [other] debate into the public domain,” he said.

While the safe-harbour modernisation continues, perhaps that will keep a lid of sorts on the publishers vs labels rows over streaming royalties. Although that may imply that once the safe-harbour question is settled, it will be cats-in-a-bag time again for rightsholders.

The arguments will continue as to the mechanical versus the recording. I’m not pretending they’re not of concern,” said Ashcroft. But he stressed again that the more important issue right now is unity between labels and publishers as they seek copyright reform that will be in their favour.

Stuart Dredge

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