Music Ally recently interviewed BPI chief executive Geoff Taylor about the UK’s recorded-music market trends in 2017: from the growth of subscription streaming and safe harbours to Brexit and diversity.
Music Ally: Recent BPI and ERA figures show a big increase in music streaming in the UK in 2017 – why was this?
This increase is being driven by a number of factors, but a key element is that streaming is becoming ever more accessible and familiar to a more mainstream audience. It isn’t just millennials and Generation Z fuelling growth – important though they are to the market – the number of older consumers becoming subscribers is growing fast, helped by free trials and telco deals.
Data from Kantar shows that in 2014, 4.4 per cent of consumers aged 45-54 had used a subscription service at some point that year, whereas in 2016 that figure had risen to 13.6 per cent, making these older consumers the fastest growing age group. We believe that dynamic has continued in 2017.
The market is growing based principally on subscription usage, rather than ad-supported streaming. This reflects that alongside ease of access and convenience, consumers are looking for a high-quality user experience and seamless connectivity. In December 2017 the landmark of 1.5 billion weekly streams was achieved, and a weekly average of 2 billion streams can’t be too far away.
MA: Do you know how many paid music subscribers there are in the UK?
There is no definitive number available, but industry sources suggest there may now be as many as 7.5 million – 8 million paying subscribers [note: the interview was conducted in mid-January, so this will likely have grown since[
MA: How many paid music subscribers do you think there can be in the UK? What is the ceiling for this?
Again, this is hard to say with any degree of certainty, but there is clearly the potential of quite a bit more to come. According to Midia Research, for example, Sweden has a subscription penetration rate three times higher than that of the UK. Looking at the wider context, it will be interesting to see the effect of voice activated devices and other innovations in technology on streaming take up.
MA: Realistically, how much of a problem do you think Brexit will be for the UK’s music industry?
The UK can be very proud of the tremendous success that British music has enjoyed around the world in recent years. This success has been built on the openness of our musical culture, including the freedom for international talent to visit and perform in the UK, and on the ability of our artists to tour and promote their music overseas.
If Brexit involves new limitations on these dynamics, there is a risk of undermining our global music exports as well as the high level of music tourism coming into the country. Our concerns relate principally to the detail of any new arrangements with the EU, which could impose new financial or administrative burden on labels, management and artists, from tax to touring.
Even small costs added on to a tour for an emerging artist can be the difference between break-even and making a loss, and new immigration or customs procedures could inhibit live shows for British artists overseas, which are often arranged at short notice.
We need government to take these concerns seriously. All physical product is currently manufactured in the EU, and any additional financial or logistical burdens bringing that into the UK for sale is a big deal for the viability of releases on small labels. We need product in stores, ready for release day without any hold ups. It is also important that we focus on transition – whatever the new arrangements are we need a good deal of time to get ready.
The other important aspect is the copyright framework, which is presently governed by EU Directives. We want to ensure that the current rules are continued, and that the UK continues to engage on the important aspects of the current Digital Single Market strategy – supporting the clarification of the value gap and defending territoriality.
We shouldn’t forget too that there are numerous countries where copyright and intellectual property are not sufficiently respected – so, if we are to forge effective new trading relationships outside of the EU that also deliver for music, it’s vital that robust protection for the creative industries is built in to these negotiations.
The EU has, for instance, recently negotiated a trade agreement with Japan that extends the term of copyright for sound recordings to bring Japan in line with the EU. We are already engaging with UK Government about our priority territories overseas and what Government should be seeking in trade negotiations.
MA: What other problems do you see the UK music industry facing?
Fortunately we appear to be entering a period that offers the potential for meaningful long term growth. But, for growth to be sustainable, it’s vital that we address the distortions in the value chain that mean that increases in music consumption do not often lead to equivalent increases in value for the music industry.
Many digital services have abused the safe harbours contained in European law to build huge businesses by distributing music to mass audiences but without paying for licences at commercial rates. These safe harbours do not just deprive music companies and artists of revenue that should be invested into new talent, they also unfairly distort competition with services that are properly licensed such as Spotify and Apple Music.
Our government needs to support the calls for change at EU level, to make sure that services making music available have to negotiate fair commercial licences, and that appropriate changes are made to the UK copyright framework once we leave the EU.
There has been a strong focus over the last two years on the challenges of breaking new UK artists in the more globalised streaming market. This is something the BPI monitors carefully and we believe passionately that strong local editorial and curation by streaming services is vital not only to help domestic artists break through, but also to maximise the appeal and growth of streaming services to a local audience.
We have also been encouraging the BBC to take more risks programming new music on television and its online channels. “Sounds Like Friday Night” has been a welcome development, but hopefully it’s just the start of more to come.
The industry continues to face a challenge in ensuring that it attracts and promotes executive talent from diverse backgrounds, in a fair and inclusive way. The BPI and UK Music are working closely together on this, but it remains a long term challenge that the industry needs to address.
We also believe there is more work to do in preserving a healthy music ecosystem in the UK. Small music venues must be protected, as they allow new artists to develop their craft and build their fanbases, so we support the work of the Music Venue Trust and UK Music in this area, and back the wider introduction of the ‘agent of change’ principle.
We also need to look carefully at the opportunities given to young people to learn an instrument and study music. The changes in school curriculum and funding are beginning to have a real adverse impact on music education in the state sector. A diverse industry needs access for all to basic music education, for all young people to be given the opportunity to try an instrument and see whether they have talent.
This is not just about our business, it’s also about the enjoyment and social value we create by playing an instrument alone or with others. Many people, myself included, appreciate the great personal enjoyment they can get just from learning and playing music for fun. And almost everybody can learn to sing given the right opportunity.
MA: You said: “We should make the UK the best place to invest in new content by forging an online environment that is safe for consumers and where illegal sites cannot flourish.” Do you see the UK government as being receptive to this need?
Absolutely. In fact the government helped to broker talks in 2016 and 2017 between the BPI, the film industry and Google and Bing that has led to real progress in demoting links to illegal music content in search results.
I think our government now understands how vitally important the creative industries are to the UK’s future prospects – to the UK economy, our balance of trade and our ‘Soft Power’. Arguably this will be more important than ever in a post-Brexit world where music acts as Britain’s ‘international calling card’.
The government is discussing its plans for a “Digital Charter”. This represents a real opportunity for the UK to pioneer a framework for the digital world that protects consumers and business, whilst promoting growth online.
This is an opportunity to establish clearer rules requiring online intermediaries, including social media companies, online marketplaces and online advertisers, to take greater responsibility to reduce illegal activity and harm online and to introduce faster, business friendly tools to ensure that illegal activity is reduced at a much greater rate.
This understanding of the importance of the creative industries has not always been there – only a few years ago our politicians were perhaps somewhat dazzled by new digital and social media platforms and the shiny future they appeared to offer. Since then they have realised that the success of these sites is to a significant extent driven by the rich content produced by the creative industries – a sector now worth £92 billion per year to the UK economy.
It’s one reason why the Department for International Trade has to date invested £2.4m in the Music Exports Growth Scheme – a programme aimed at boosting music exports that is managed by the BPI – and why the government also helped to fund the Get it Right (From A Genuine Site) educational campaign designed to reduce copyright infringement and encourage uptake of legal music, film and entertainment services.
We welcome the appointment of Matt Hancock as Secretary for State at DCMS as he has shown himself to be a passionate champion of the creative industries and an ardent supporter of British music and a Minister that gets things done.
His ideas on the Digital Charter are deeply thoughtful and he has the real opportunity in post to pioneer a new approach, with intermediaries working together with government to increase protection of consumers and of content that will forge a new age of digital growth here in the UK.
We look forward to continuing our productive relationship with the secretary for state and his team at DCMS and we wish him well in this important role for our sector.
MA: Recent figures showed a yearly rise in both music consumption (BPI) and music spend (ERA) in the UK – how long can these increases continue?
Growth in 2017 was driven principally by growth in music streaming, but was supported also by the resilience of demand for music on physical format. Obviously one should expect that over time adding more new music streamers will get harder as the market matures.
However, the Swedish example suggests that there is plenty of headroom for growth in the number of UK streaming consumers, and there is even greater potential for growth in value if the value gap is addressed, more action is taken to reduce illegal consumption and Brexit is not allowed to jeopardise the success of British music exports and music tourism.
Moreover, new technologies such as such as voice-activated devices, AI and virtual reality have the potential to drive new consumer engagement that could push the market on beyond current expectations.
MA: How optimistic are you about the future of the digital music market in the UK?
With music consumption rising at its fastest rate in nearly 20 years there is plenty to be optimistic about. However, whilst the rapid growth of streaming and resilient demand for physical formats gives us confidence for the future, it is important to remember that the music industry still has a long way to go to recover fully. Structural challenges must be overcome if long-term growth is to be sustained.
First we must continue to fight the value gap, so that all digital platforms pay fairly for their use of music. Second, government must ensure our musicians are able to tour freely even after we leave the EU. Finally, we should make the UK the best place to invest in new content by forging an online environment that is safe for consumers and where illegal sites cannot flourish.
If we do this, the future for British music, which is already one of our leading exports, will be very bright.