12 MusicWeek 15.06.12
BUSINESSANALYSIS EDITORIAL
US opportunity hints at potential embarrassment of riches for PPL
IT SAYS EVERYTHING ABOUT HOW RAPIDLY PPL’s international income has grown from a point of zero over recent years that its latest set of overseas figures – despite again being record- breaking – could be viewed as underwhelming. After reporting headline-grabbing year-on-year rises over the
previous two years of 40.3% and 46.8%, the society this past year saw the revenue it collected from outside the UK grow annually by a far more modest 2.2% to £32.4m. But accompanying the announcement of this sharp slowdown
has been a development across the Atlantic that could ultimately swell PPL’s international income stream to levels not previously imagined. A long-cherished goal for PPL and others has been to start
receiving performance royalties from analogue radio stations in the States, one of the few markets in the world, alongside unlikely US bedfellows China, Iran, North Korea and Rwanda, that does not presently pay them. This state of affairs occurs despite FM and AM radio having to compensate songwriters and music publishers for the privilege of playing their repertoire, while other radio outlets in the States such as satellite and online stations have to pay royalties to performers and labels as well as to the songwriting world.
‘A long-cherished goal for PPL and others has been to
start receiving performance royalties from analogue stations in the US, one of the few markets in the world, alongside
unlikely bedfellows China, Iran, North Korea and Rwanda, that does not presently pay them’
However, the possibility of US analogue radio finally having to
follow suit after years of unconvincingly arguing its compensation to artists was promoting their music on air moved an encouraging step nearer last week when it was unveiled radio giant Clear Channel had agreed to pay performance royalties to Taylor Swift, Tim McCraw and other artists on the Big Machine label. This advancement, which emerged at the same time as a
Congress hearing on the future of audio was taking place, is clearly a long way off from what the industry has been pressing for years, which is that every traditional radio station in the States is made to pay these royalties. But it is a start and what is particularly interesting about this development is that Clear Channel has agreed to pay out this money despite not legally having to do so. There remains no justification that stations on the FM and AM
bands can get away with not rightfully compensating musicians and labels whose work is fuelling their own businesses, especially when other types of stations in the US are required to do so. What Clear Channel has agreed should not let anyone forget that, but it does at least represent some kind of change in attitude after years of little or no progress. Ultimately, though, what is needed is long-proposed legislation (such a law was discussed by Congress back in 2009) to finally become reality, covering all stations and compensating every artist and label, just as already happens in the rest of the Western World. Paul Williams, Head of Business Analysis
Do you have views on this column? Feel free to comment by emailing
paul.williams@intentmedia.co.uk EXECUTIVE SUMMARY 2007
PPL 2011 revenue up 7.0% to £153.5m with distributable income rising 5.4% to £130.8m Public performance income up 9.8% to £55.0m Broadcasting and online revenue rising 7.3% to £66.2m Sharp slowdown in rise of international income to 2.2% annually, taking it up to £32.4m Cost to revenue ratio increases from 13.6% to 14.9%
LICENSING BY PAUL WILLIAMS
P
PL’s annual revenues broke through the £150m barrier for the first time in 2011, despite a sharp slowdown in the growth of
international income. Figures unveiled this week at the organisation’s
AGM in London reveal licence fee income last year reached £153.5m, 7.0% up on the previous year and 56.8% higher than just five years earlier when
2006 2005 2004 2003 2002 2001 2000 Source: PPL £50m £80m £110m £140m £170m
£97.9m was brought in. Fran Nevrkla, who stepped down as PPL CEO
last year after 11 years but remains chairman, is “quietly pleased” about the figures, not least because he says he did not want to go out on a bad note. “What we as a team have achieved has been
frankly pretty remarkable because as everybody knows business is not great, not just in the UK but Europe generally,” says Nevrkla who was succeeded as CEO by Peter Leathem. “People are struggling, the economy is shot to pieces and exchange rates
INTERNATIONAL GLOBAL EFFICIENCY NEED
PPL CEO PETER LEATHEM believes a smaller year- on-year rise in international income last year has exposed overseas societies’ system limitations in handling increased quantities of data. While the sums collected by PPL overseas in
2011 represented a new annual high of £32.4m, this was only £700,000 more than was brought in during 2010. The year before overseas revenue rose by £10.1 m or 46.8%. “With international over the last number of years
we’ve seen quite dramatic growth, but we start to get to a level or volume whereby, as we’ve been improving our data, our systems and how we operate, other societies trying to keep up with that volume has become trickier,” says Leathem. “For the first time last year we bumped into a few
more problems in trying to get all the overseas societies to be managing the level of information
we were sending them.” All this has further highlighted to the CEO the need
to have a “world system that works more effectively and more efficiently” and across borders. Despite these challenges, both Leathem and PPL
chairman Frank Nevrkla expect international revenue to continue to grow with Nekrkla suggesting it could reach £50m annually if PPL can capture 90-95% of what is out there. Several new countries appeared on PPL’s
international balance sheet for the first time following deals signed in Bulgaria and Serbia and with the AFM/AFTRA fund in the US, while new agreements were inked in Croatia, Estonia and Latvia as well as with the liquidators of Italian performers organisation IMIAE. The US provided PPL with the most international income in 2011, bringing in £5.0m, up from £4.6m
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PPL PLEASED... BUTQUIETLY SO
The collecting society broke the £150m revenue barrier for the first time during 2011 – overcoming a harsh economic environment and a tough international climate
PPL 2011 licence fee income by sector
Broadcasting and online 43.1%
Public performance 35.8% International 21.1%
Source: PPL PPL annual revenues 2011 2010 2009 2008
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