PRS for Music has today released its financial results.
2019 was another bumper year for the performance rights organisation whose total royalty revenue reached a record-breaking £810.8m, an increase of 8.7 percent on the previous year.
PRS has also revealed that last year it processed 18.8tr performances, including music streamed, downloaded, broadcast on TV and radio, played in UK businesses and played live around the world.
Once again, international royalty income was the biggest money-maker for PRS members, highlighting the popularity of British music overseas. Live performances of music in the UK and music used in business premises, collectively known as Public Performance, saw an increase of 15.7 percent on 2018 to £222.2m.
Meanwhile, a rise in UK music festivals, including the return of Glastonbury, contributed to royalties from live performances climbing 38.8 percent to £54m.
But while PRS’ 2019 results are unsurpassed, the COVID-19 crisis means that future royalty distributions are unlikely, at least for a while, to paint anything like the same picture.
With shows and festivals cancelled globally, TV and film productions on hold and nearly all public premises closed for the foreseeable, the music industry as a whole faces significant uncertainty.
We spoke to PRS for Music’s chief executive Andrea C. Martin to discuss the organisation’s financial results and what lies ahead for its 145,500 songwriter, composer and publisher members.
PRS once again collected record-breaking revenue for its members in 2019. What do you attribute this year-on-year increase to?
Our Public Performance revenue increased almost 16 percent making it our second biggest area of revenue. 2019 was our first full year in operation with our joint venture PPL PRS and it’s working well.
Our live performance revenue climbed 38.8 percent in 2019. Not only because we saw some great concerts like The Spice Girls, but we relaunched our Major Live Concert Service and that’s also working really well. We’re now able to pay quicker than we ever have.
We also saw a major increase in online. More than 22 percent came from streaming and 47.5 percent from video on demand. In 2018 we signed some new deals and in 2019, even better deals. Deals with Facebook and Instagram both played a big part.
Finally, even though International was slightly down, it still plays a huge part. We are very strong internationally. If you look at 2019’s results, our international royalty income represents 38 percent of our overall income on a constant currency basis which is incredible.
We’re very strong because we have such a big Anglo-American repertoire that travels very well. When you’ve got the likes of Ed Sheeran playing, it makes a big difference.
There’s no getting away from the fact collections will have dried up throughout this period. What lies in store for PRS members as a result?
We don’t know what percentage we’re going to be down. We’re currently working on a forecast and will probably have a better idea of how our July distribution will look around 18 June. It’s clear there’s going to be a significant financial impact on our members which is why we launched the Emergency Relief Fund.
The impact is going to come from public performance, live and international. By how much? We don’t know, but we know it’s going to impact 2020 and 2021. No one has a crystal ball. Just this morning [7 May] we were given the news from the Bank of England that the economy could shrink by 14 percent and this week we were told that the number of COVID-19 related deaths surpassed Italy.
These are such unprecedented and unpredictable times. To be able to give a percentage right now is impossible but we will soon know what our July distribution is going to look like. We’re doing everything we can to safeguard our members’ royalties and mitigate the risk.
'We must continue to run this company efficiently, but we also need to keep investing in the long term.'
Can you explain the steps PRS is taking to safeguard member royalties?
First of all, I would say that we’re looking at our costs. We’re already very efficient. In 2019, our cost to income ratio was below 11 percent. But we’re still looking at our costs. We’ve furloughed some of our people, some staff have had their hours reduced and the executive leadership team have all taken a hit in their salaries. We’re looking at everything.
But, having worked at old companies like Reader’s Digest, I know that if you cut cost too much, you end up cutting the tendons and you can’t move. We don't want a repeat of what happened there. Let me give you an example. If we don’t invest in a cloud-based solution for our distributions when we’re working with such high volumes of data, we won’t be able to distribute. We must continue to run this company efficiently, but we also need to keep investing in the long term.
How important has it been to you to properly warn your members about the impact the pandemic will have on future distributions?
I think it’s important, but what’s more important is doing something about it. I wish I could sit here and say ‘you’re going to earn x in 2020 and x in 2021’ but that’s virtually impossible.
Even though we had great results in 2019 versus 2018, even though our April distribution was the highest in PRS history, we are clear that there will be a significant impact on Public Performance, on International and a bit on Broadcast.
What we do in a time of crisis to be proactive and to be ready is very important. I think the launch of the Emergency Relief Fund shows that we really do care about our members. It was launched 26 March around the time UK went into lockdown and since then, around 4,000 music creators have benefited. We’ve distributed £1.2 million with the PRS Members’ Fund and PRS Foundation, our two charitable arms.
We’ve raised over £2.1 million through various initiatives including our 24-hour online event PRS Presents LCKDWN. A major publisher also donated over £200,000. We actually launched the second phase on Monday 4 May and in four days, we had close to 1,600 applications. I’m pleased to say that the majority of them hit the eligibility criteria.
So, we’re trying to warn members that yes, money distributed is going to be down, especially in the third and fourth quarter. We’ll have a better idea of how much at the end of June. But doing something about it is the most important thing. Actions speak louder than words.
'What we do in a time of crisis to be proactive and to be ready is very important. I think the launch of the Emergency Relief Fund shows that we really do care about our members.'
Licence breaks will result in a drop in income for labels, performers, songwriters, publishers and other rights-holders. How difficult has it been to strike a balance between appeasing licensees and protecting members’ incomes?
These licence breaks only apply to some of our Public Performance licensees that we have with our joint venture PPL PRS. With our other licensees, we are making sure that the money is coming in.
We have given a licence break to pubs, retail stores and other public premises so they don’t have to pay right away. What we don’t want is for these places to close permanently because that won’t help either. Of course, when they can open again and when our joint venture is able to return to work – around 50 percent of staff there are currently furloughed – we will do what we can to ramp up the call centre and the collection centre.
What message, if any, has this given the industry about its reliance on live performance?
I think there are two messages. First of all, I think the music industry needs to work together because we are better together. Right now, we need to put aside our individual agendas to move forward as one and appeal to the Government as one.
We’re going to come out of this very different, on a personal level and on a work level, the new normal is going to be very different.
It’s going to be a more digital world so on the live side we need to look at live streamed gigs, perhaps there’s a premium to attend, either way, we need to reinvent the way we look at music. What’s hard is the online world doesn’t pay as well as live does, so how do we transform the industry as we move forward?
Live will come back. Public Performance will come back. International will come back. But it won’t come back in the same way. We’re going to have a different world and that’s why PRS is constantly evolving, to ensure that we are able to adapt.
We will be putting together a ‘new normal’ task force so that we’re ready for this new world but also so that we can mitigate some of the downfalls and some of the risk.
We’ll be able to overcome some of it, but we won’t be able to overcome all of it in the short term.
'I think the music industry needs to work together because we are better together. Right now, we need to put aside our individual agendas to move forward as one and appeal to the Government as one.'
If you could give one piece of advice to PRS for Music’s membership at the moment, what would it be?
It’s all about a mindset and I know it’s hard to think of it like that when you’re struggling. But there’s two ways of looking at life and that’s making it happen or letting it happen to you.
Reinvent yourself. Think outside of the box. Try to stay positive. Look at all the different opportunities, and there are still opportunities out there. Look at how you can get involved in live streaming to stay connected with your fans. Work together. Be proactive but know that we are doing everything we can to try and help.
I understand all of these things are hard when you barely have food on the table and you’re worried about bills. But when this is all over, it will be a different world and it’s important to be prepared for that. Look at what’s going to be possible in the new world. I think working together is key. There is a lot of in-fighting in the music industry, unfortunately, but there’s no doubt in my mind that we are better together.
Do you think that all of this will see the music industry as a whole change in its attitudes towards working as a collective?
I really hope so. We need to think of the purpose and think about where music really comes from. We must protect the songwriters, the composers and the artists because without them we do not have a music industry.
Working together with our publisher members, we can help protect the essence of music and those that create.