April 24, 2017
The UK record company trade income, which is the combined revenues generated through streaming, sales of music across physical and download formats, performance rights, and “sync” music licensed for use in film and TV, games and advertising, rose by 5.1% in 2016, the BPI reports. Trade income of £926 million represents the largest annual total in five years.
The £44.6 million trade income rise on 2015 was driven largely by the dynamic growth in streaming revenues, a 61% increase, which more than offset the decline in income from physical formats and downloads. It also meant that streaming accounted for 30% of overall label revenues in 2016 (compared to physical at 32%). Such a rate of growth will undoubtedly see the format overtake physical to become the leading contributor to label revenues in 2017, the BPI says.
Revenue growth was largely experienced in Q2 and Q3, whilst Q4, traditionally the industry’s biggest sales period, grew by only 0.4%, although that compares to Q4 2015 which included the release of Adele’s album 25.
The BPI says that whilst the increase in revenues is to be welcomed, there remain a number of structural challenges that inhibit growth, including illegal websites and the “Value Gap”. The latter term describes the growing mismatch between the huge value that certain digital platforms, such as YouTube, extract from music or other entertainment and the relatively small amount they return back to the creators concerned.
The BPI says that the UK recorded music industry also faces stronger competition on global streaming platforms and will need to work with government to ensure that, post-Brexit, UK artists retain access to EU markets, and that weak IP regimes are strengthened in key export markets.
Geoff Taylor, Chief Executive BPI & BRIT Awards, said: “It’s encouraging to see revenues rise significantly, as more and more consumers enjoy the benefits of subscribing to a premium streaming service or rediscover the joys of vinyl.
“Britain’s world-leading music sector has the potential for sustained growth in the years ahead, but this exciting future can only be realised if government makes creative businesses a priority post-Brexit.
“What does this mean? It means making sure that UK artists can tour freely in EU markets and that UK businesses can access the best talent. It means taking firm action against illegal websites that deny artists a living, and it means making clear in UK law that huge online platforms must pay fair royalties for the music they use. And it means working with industry to boost exports by promoting strong IP protection in trade negotiations with third countries.
“UK record labels will continue to take huge risks backing emerging British talent and investing hundreds of millions of pounds annually to bring it to a global audience. With strong support from government, British music can continue to be a global success.” To read BPI’s press release in full, click here.