Slowing music sales reduce royalty collections

Slowing music sales reduce royalty collections for creators

PRS for Music, the organisation that represents 75,000 songwriters, composers and music publishers in the UK, today reported a 1% fall in the collection of royalties for 2010 to £611.2m.  (2009 = £618.2m)

A fall in high street sales of recorded music, and difficulties capturing the full value of music use online, led to a £7m decline in royalties collected. 

The drop in royalty collections was in part offset by stronger international and radio royalty revenues.  Royalties collected are distributed to creators when their music is played, performed or reproduced in the UK or abroad. 

• 8.8% fall in royalties from recorded media – primarily CDs and DVDs as a result of tough trading conditions and customers switching to digital formats both legal and unlicensed.
• Growth in royalties from legal digital services slowed to 4.3%; 63 digital music services are now licensed in the UK. 
• An improving commercial radio advertising market contributed a 2.1% rise in royalties collected from music use in this sector.
• An increase of 1.7% to £169.8m in royalties collected from licensing British music use internationally.   Royalties are now collected from 155 countries worldwide.

The loss of high street outlets, the slowdown in physical music sales as well the challenges capturing the full value of music usage online has meant for the first time we have seen royalties collected dip.   Previously, any reduction from falling physical sales had been offset by our strong performance in music licensing both in the UK and internationally.  In 2010 slower growth at home and abroad failed to fully mitigate the decline.

We predict future growth from the developing legal digital market, and from licensing the use of UK music abroad, especially in emerging markets. Collectively, the industry needs to work together to support the fledgling digital market in the UK ensuring legal choice for consumers and vital income for creators.

A focus on reducing administration costs and improved efficiency at PRS for Music meant that whilst revenue collected reduced by £7m, the amount paid to songwriter, composer and music publisher members only reduced by £0.8m.

*An explanation of business areas:

1. Broadcasting & Online – covering all radio, TV & digital services
2. International – use of our member’s music abroad in any form 
3. Public Performance Sales – including clubs, music venues, businesses & commercial premises
4. Recorded Media – such as CDs & DVDs