British collecting society PRS for Music is the latest PRO to publish impressive numbers for 2017. Its revenues were up by 12.7% year-on-year to £717m (just over $1bn) while its payouts to members grew by 14.7% to £605.1m ($848.3m) to set a new record.
The figures included a 5.2% rise in international revenue generated by PRS members’ music played abroad to £261.4m; an 8.5% increase in broadcast revenues to £134.6m; and 8.1% growth in public performance income to £198.1m.
As for online platforms, they saw the biggest growth for PRS: up 52.7% year-on-year to £122.9m, including £42.2m of streaming income, which was up 68.6%. The society processed 6.6 trillion performances in streams, downloads, broadcasts and concerts in 2017, up 53% year-on-year.
PRS for Music CEO Robert Ashcroft talked to Music Ally ahead of the publication of the figures, to give his view of the trends involved, as well as some of the other current industry issues from the ‘value gap’ (or ‘transfer of value’ as PRS prefers to focus on) to the emergence of AI music-creation technology.
On growth of international revenues:
“It’s not an accident. We set out with a strategy back in 2010 based on collaborating with others, working very closely with other societies in other parts of the world. So there’s our work with STIM and GEMA on ICE; and now our partnership with PPL; but it’s wider than that.
It’s about when you work with others to understand how they operate, and what their distribution rules and methods are, and make sure that in their ways of working, they identify the use of our members’ repertoire. We’re working with Brazilians, Argentinians, Koreans, in China, across Europe and of course with our American counterparts.
You’ve got to understand how best to track the use of your members’ repertoire. You learn by going around talking to people, meeting them, understanding, listening and helping out. And then they want to help you. And that’s driven our [international] business to over £260m.”
On online music, and Facebook / YouTube:
“We were the first society to license iTunes, the first to license YouTube, also SoundCloud. We’ve always worked pro-actively with these services, as well as being heavily involved in this whole debate about the transfer of value, and making sure we have a level playing field and a functioning market.
All the major players recognise they need licences, so it’s now about an evolution of business models more than anything else. I’m very interested to see what Facebook does with their music strategy, and very interested to see how YouTube succeed with their new subscription service.
One of the things that we know doesn’t work if you’re lobbying is special-interest lobbying: ‘We’re doing badly, they’re doing well, we should do better’. What worked for us was talking about how markets should function, because the EC [European Commission] wanted a functioning digital single market.
One of our arguments back in early 2015 was ‘Hey, this market isn’t working guys… there’s a transfer of value between one market [music] and another [tech] and that’s bad for growth. So we put forward an economic argument.
I don’t think we’re there yet with the completely-level playing field, but there’s no doubt in my mind that YouTube are serious about their subscription strategy, and no doubt in my mind that Facebook know they need to be licensed. What is their take on music, and what is their music strategy going to be? That’s yet to be seen, but they certainly understand the value of music to their business.
For a long time [in the 2000s] every Apple ad showed people dancing with white headphones. That close association with music drove Apple’s growth as a company, and there’s no doubt that music can also now drive YouTube’s growth and Facebook’s growth.
Facebook and Google, between those two companies they dominate the online advertising market globally, but advertising revenues are not growing at the rate they want to. But if YouTube migrates its business model [to paid music subscription as well as advertising] and are able to grow, we want to grow along with them. I would much rather be collaborating with them in growing the business than I would fighting with them.”
On exploding music usage:
“6.6 trillion uses last year was quite a lot to swallow! And to distribute accurately once you start talking about new companies using music in new ways, we’re only going to add to that.
So this project we’ve got with GEMA and STIM, through ICE, where we’re porting our copyright-processing structure to the cloud, is of critical importance.
If you can’t demonstrate to the legislators that you’re able to process this and pay the right people – that you’re not swamped by the data – then copyright retains its credibility. Otherwise, if you get to the point where you can’t cope, they’ll be going to Google saying ‘the collecting society model doesn’t work, you’ve got to pay them’.
We’ve got to look out for our members: it’s of critical importance that we play our part in the ecosystem. So there’s also this big project we’ve got with ASCAP and SACEM to improve the links between sound-recordings data and musical works.
We’ve got to make sure those links are authoritative and shared around the world, so that when a sound recording is played, we know who wrote it. Historically, country-by-country, we’ve not ended up with that coherence that we need.”
On why this isn’t going to flop like the Global Repertoire Database project did:
“If you look at some of the fundamental concepts that underline the way we’re developing ICE, and look back to some of those concepts in the GRD, the problem was not whether it could be done. It was who was going to pay for it, and how was it going to happen?
We would not be able to do it if we didn’t have the advent of cloud computing. It is a game changer: the ability to write these things from the toolkit into the cloud, giving you the computing power you need. Back in the GRD days, that was going to require much more heavy lifting.
We’re certainly doing it now with the three shareholders of ICE, and we have eight societies’ data in the ICE database. The model we have going forward will allow simultaneous ingestion of many societies’ data at the top, and then filters to identify any disputes or differences, which will then get referred to the parties to resolve.
It’s going to create an automatic data-cleaning system that I think will be of enormous benefit to the industry, and then add to that the need to match the sound recordings to authoritative data [on works].
I think history will look back and say that the fact that the ICE partners were able to get together and agree on a common set of rules for data hierarchy, was the absolute foundation of the future cleaning of [music] data. It is something we have to get right: our members need it.”
On the emergence of AI music creation:
“It’s certainly something we talk about at PRS for Music, and absolutely something we debate around the table at the CISAC [global collecting-societies body] board.
What I would like to think is that the people who are writing the algorithms would like to make money out of their copyright. If there’s a competition between humans and machines, let’s at least be all retaining our intellectual property in the sphere!
A dear friend of mine, Professor Nigel Osborne, who’s now retired from the University of Edinburgh, once said to me ‘The day that people make love to machines, then we’ll have artificial intelligence making music’. Make of that what you will!
But there is a long history of AI music dating back to the 1960s and 1970s, so if you’re interested in exploring that, people like Nigel were there.
AI sits alongside any new technology: first and foremost, we need to understand what’s going on. This music market is not something that just happens: it has to be shaped. We have to make sure that as it develops, we’re in a position to track the usage of our members’ music; make sure they get paid; and make sure the business models get licensed in a proper way. If you’re not on top of it, you can’t do that.
If you go back to the early 2000s, the ringtones market kind-of escaped the collecting-society movement in Europe. We can’t let that happen again. So we have to understand what’s happening in AI, in gaming, in augmented reality… Where does music play in to these things?”
On the outlook for PRS for Music’s songwriter members in the streaming era:
“I do have one concern. The headline numbers are very good, but if you dig in to it, you’ll find we are paying out more members for more songs, and that the number of members and songs is growing faster than the headline rate, which means that the ‘half-life’ of a song in financial terms is going down.
The people who make their money over their lifetime out of evergreen songs? I wonder where that’s going. This is more than a collecting-society thing, it’s an industry thing. There’s no doubt that the songwriters are having to sprint round the hamster wheel faster than they used to.
There is a question in my mind about distribution to the middle and longer end of the tail: the ability to make a living as a songwriter. Certainly from the individual songwriter’s point of view: they look at these numbers and think ‘well, we don’t see it’. And we know why that is: because of this half-life of a song.
But the thing we’ve got to focus on is that there is growth, the platforms are becoming licensed, and through people’s access to technology, music enjoyment is improving. We’re getting out of this highly-compressed era, and we’re back into an era of growth. That is the most important thing.
What I don’t want to do is to get into an era where it’s going down and we’re worrying about other things. This is a nice problem to have: the market is growing strongly and it looks like it’s sustainable. We could be in another golden era. But it’s important that our members know that we understand their worries. We look at the world through their eyes.”