It’s now the third time that Will Page and Chris Carey from PRS for Music added up the UK music industry. The main result is that total UK music revenues fell 4.8 percent to £3.775bn in 2010 compared to £3.964bn the previous year. This figure includes the retail value of recorded music (-7.9% to £1.237bn) as reported by the British recorded music industry body (BPI), the estimated revenue of live music (-6.8% to £1.480bn), the adjusted collections by PRS for Music (-1.3% to £0.425bn), the adjusted collections by PPL and VPL (+18.9% to £0.079bn), the estimated inter-company B2B revenues (+7.2% to £0.218bn), the publishers’ direct revenues excluding income streams from PRS for Music (+0,6% to £0.242bn) and advertising and sponsorship revenue (+4.2% to £0.094bn).
The main drivers of the 4.8 percent fall from 2009 to 2010 was the ongoing decline of recorded music sales mainly due to an accerlated decline of the physical product, which could not compensated by the growth of digital music sales but also the decline of primary ticket revenue. However, the fall in ticket sales, which happened for the first time in recent years, should not be interpreted as a recession of the live music market in theUK. According to the authors “supply dictates demand” (p. 4). Since stadium- and arena filling acts such as the Rolling Stones, Coldplay, Take That an others were not on tour in theUKin 2010, the number of concerts in this market segment decreased. However, the music festival sector in theUKboomed due to a growth of the number of festivals (up 16% on the previous year), which led to increasing primary ticket revenue by nearly 20%. Thus, the authors conclude that the live music market will be growing in 2011 again, when acts such as Rihanna and Justin Bieber will be on tour in theUK.
The revenues of royalties collected by PRS for Music show a minus compared to 2009 mainly due to a drop in recorded music sales (-8.8%), which was offset by a growth in royalties from digital services (+4.3%), in radio royalties (+1.9%) and in cost savings of nearly 10%. However, the revenue of royalties collected by both performing rights societies (PPL and VPL) grew by 18.9% to £79m mainly due to a 49% increase of revenue to £31.7m from international reciprocal contracts of PPL with foreign collecting societies. In addition the B2B income of the record companies beside recorded music sales grew by 7.2% to £218m. In a detailed analysis Page and Carey show that the main factors of the increase was the additional revenue of £10.8m from ad-funded digital services such as Spotify and we7.
The overall negative trend was also offset by music publishers’ revenues (excluding payments from PRS for Music), which grow 0.6% to £242m in 2010. While the UK music publishers’ income from other collecting societies outside the UK declined by 10.0% (-£12.8m), and while printed music sales and revenue from grant right licensing remained more or less stable, the growth of 20.3% (+9.5m) in sync licensing prohibited a fall in music publishers’ income.
Last but not least, music related advertising and sponsorship revenue grew from £90.0 to £93.6m (+4.2%) mainly due to a 6.8% increase (+£2.1m) in live music sponsorship and a 16.3% (+£1.0m) growth of music-focused digital and mobile advertising and sponsorship activities.
To sum up, the Page’s and Carey’s analysis provide a good view on the ongoing structural break of the music industry – and not only theUKmusic industry. The recorded music market is still dominant, but looses more a more ground despite the growth of digital sales. However, as the authors indicate, the digital music market will be saturated in the near future and thus, will not be able to offset the losses of the physical product. Instead, the music industry turns more and more to a service related business in which the licensing of musical works as well as the managment support of artists will become more and more central. All the figures presented in the report show in this direction and all the players in the complex value-added network of music production, dissemination and consumption are well advised to accept the roles of the digital environment. Therefore the authors have two suggestions: (1) to standardise and centralise the metadata (e.g. by DDEX and a Global Repertoire Database) in order to meet the complexity and the higher volumes data to manage and to lower transaction costs; (2) to focus more on emerging music markets of the BRIC economies – Brasil, Russia, China and India.