British music body the BPI has just published its annual report on the UK recorded-music market.

Read our full analysis for the details. But Music Ally also spoke to chief executive Geoff Taylor about the figures, including questions about ad-supported streams, YouTube, and whether just counting recorded-music income misses some important aspects of the modern music industry.

It’s a 53-week year rather than a 52-week year as far as your data goes. Is this a nice way to fudge the numbers and make everything look a bit better?

No. It’s just that some years have 53 weeks. We always report on the year. If it happens to have 53 weeks in it, we point that out. It is what it is. It pushed it up a little bit but we would absolutely still have been in positive territory [if just 52 weeks had been counted].

Ad-supported revenue is not included in the value figures. Why not?

It’s because you can’t give a retail figure for ad-supported income. You can work out what the retail value of a certain number of sales or a certain number of subscription streams is. But for ad-supported streams, it depends on whether or not ads were served against that stream. The retail number we have quoted would have been larger were it possible to include those figures.

When could that be included? It’s revenue coming into the industry and to not include it fails to tell the full story of the market.

Whether it is something we will be able to do for January [each year], I don’t know. You can’t gather the data in the same way because it’s not just based on units. We can give more thought about ways to reflect that in a retail-based figure. But we agree ad-supported income is increasingly important. But it [for now] remains a relatively minor share of the overall pie and, in my view, is smaller than it should be. Nonetheless, we would like the figures to be as comprehensive as possible; but you need to understand that advertising doesn’t work in the same way as retail.

Why is ad-supported revenue smaller than it should be?

When you look at the volume of streams that take place on ad-supported services and the revenue that they generate [there is a disparity]. When one is talking about volumes of that order, ad-supported is not making the financial contribution it should to investors in music compared to other formats.

Streaming was up 82% in volume last year but only 50% in value. Can you clarify why this is?

The volume numbers include ad-supported and subscription streams but the value number does not include ad-supported because we cannot put a value on it very easily.

YouTube streams count towards the charts in the US but are not even in the overall market figures for the UK. When can it be brought into the fold in terms of its volume and value contribution?

It is obviously discussed here from time to time as to whether video should be included in the Official Chart. That is currently not part of the plan. There are differing views around the industry as to whether it is right to include music video. We have seen strong views expressed on that in the media. For the time being, because the Official Charts Company does not include videos, we don’t include them in our numbers.

Is this punishment for YouTube not necessarily being a good actor and therefore not officially endorsed by the BPI?

Hah hah – no, it isn’t! It’s really not. There is a debate in the industry as to whether or not including videos in the charts would be good for the industry. That is a continuing conversation. We keep the charts under regular review. The fact that video contributes so little economically back to the business – in terms of ad-supported video streams – doesn’t help the case for its inclusion.

Could SoundCloud streams be included in the future?

If they become a fully licensed audio streaming service then, potentially, yes. The OCC and the BPI track legal consumption of music – and that’s what we intend to keep doing. We don’t include services that exploit music but aren’t properly licensed.

Excluding Adele (on XL), the majors dominated in the most popular albums, tracks and artists of 2015. Is the idea of digital leveling the field for indies a myth?

Major Lazer did pretty well this year – so that’s another independent artist. Overall, the data suggests the independents do pretty well on streaming. There are obviously concerns in the independent community as to whether they are doing well enough at the top reaches of the chart.

This is not necessarily something new but the question is this: is it even harder for streaming than it has been for other formats? It is very early days to tell. The fact that you have major non-streaming successes like Adele and major streaming success like Major Lazer show that it can be done. Indies always have the challenge of marketing records to get to the very top of the charts and there is also the concern as to the extent to which they can influence playlists and so on.

That is a debate we have within the industry and, ultimately, I am pleased to see that indies can get to the top of the charts with streaming and a lot of them are very focused on optimising that as part of their business. From the BPI perspective, we want to make sure that indies have a fair crack of the whip and we keep a close eye on it.

Few labels today are based solely on exploiting sound recordings and often have a stake in other areas of artists’ income. Is focusing just on recorded music income only telling part of the story of a music label in the 21st Century?

All we are trying to represent here is the volume of consumption of recorded music. Clearly there are other forms of consumption and some additional revenue streams that may derive from them – whether it’s all-rights deals, partnerships or whatever it may be. We are trying to reflect how popular recorded music has been in terms of consumption by consumers and what the trends are. This set of figures that we publish annually does that and allows us to make comparisons year-on-year.

We do track internally growth in sync licensing, brand partnerships and 360-degree income. They [the labels] are registering some encouraging growth in those areas; but they still remain relatively minor when compared to the scale of revenue and consumption of recorded music. I think it reflects their [labels’] dominant revenue streams.

The purpose of this is not really to track revenues to record companies; it is to track the level of consumption by consumers of recorded music. Those are the numbers that we can get very quickly at year-end. In slower time we gather from the labels their revenue information. That is something we keep an eye on but generally don’t publish. It is not something that we have published in the past and I don’t think we ever will in the future. The job of this report is to track the popularity of recorded music.

What has Apple Music’s impact been, especially in regard to transitioning consumers from downloads to subscriptions?

It is too early to tell but I think it’s very good news for the market that Apple now has an excellent streaming product. Clearly fans now have even more choice. If you were an Apple customer, you may not have already been streaming music, but now Apple Music means you can try streaming as well as downloading. That is good as consumers will migrate to whatever works best for them.

We are increasingly seeing a multi-channel world in which fans may stream for discovery or convenience while they are on the go but still collect [physical product] for the artists they really love. Our job is to license music services of all types and give consumers the choice.

There is a complex – from a revenue perspective – migration going on from CDs to streams, or CDs to downloads, or downloads to streams. There are a number of different dynamics at play. We are encouraged, that with all these changes going on, overall consumption is rising. Providing consumption is rising, our job is to put in place the deals that allow us to generate revenues off the back of that consumption and invest in artists.

The underlying trends are positive. It is a bumpy transition, as you would expect, with several format changes going on at the same time. Ultimately, the prospects for the industry look extremely positive. Our challenge is to ensure, as more and more consumers migrate to streaming, that the ratio between those who subscribe to a premium service and those on the free and ad-funded tiers are right. We want to encourage as many consumers as possible to become subscribers.

Is the role of Adele “saving” the industry over-egged?

We are not trying to sell the story that it was Adele who has generated this strong performance [for the market]. The overall trends are still very strong. Consumption levels are high and the growth of streaming is shaping the future of our business. The fact that the growth rate has remained so high, even several years into the development of streaming, [means it] is showing a very healthy growth rate.

The fact that we also have important entrants like Apple Music only pushes that onwards. We believe the underlying trends are very strong and encouraging and you do, from time to time, having amazing and tremendously successful things like the Adele album. But we have had loads of other strong releases – Ed Sheehan, Sam Smith, Coldplay, One Direction – over the last year or two. Adele is obviously a phenomenal success but we don’t believe [that’s the sole factor] and the underlying trends are the things to look at.

EarPods and phone

Tools: platforms to help you reach new audiences

Tools: Kaiber

In the year or so since its launch, AI startup Kaiber has been making waves,…

Read all Tools >>

Leave a comment

Your email address will not be published. Required fields are marked *