THE BIG STORY
Rights issue: Societies braced for major downturn in licensing revenue
PRS For Music and PPL CEOs Andrea C Martin and Peter Leathem open up about the Covid-19 effect on royalty collections in the years ahead
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T PPL power: Peter Leathem
he bosses of PRS For Music and PPL have revealed that there will be a severe impact on distributions in the years ahead for songwriters, performers and other rights-holders resulting from the coronavirus. As well as the immediate loss of income from public performance licences following the economic shutdown in the UK, there will be a delayed reaction in live and international as collections dry up globally for the period covering the pandemic. PRS For Music and PPL have issued record results in recent years, but both are now warning members about the future level of distributions. “It’s pretty clear there will be a downturn in the overall collections for this year,” said PPL chief executive Peter Leathem. “We’ll have to see how that carries forward into next year, but certainly there will be an impact and we’re trying to make that clear to members as best we can.” PRS For Music CEO Andrea C Martin said it was impossible to fully envisage the scale of decline until the lockdown exit strategy is in place. “We’re now in the middle of forecasting what happens in the third and fourth quarter,” said Martin, a Music Week cover star in March. “Over 30% of our revenues come from international, so we’re spending a lot of time talking to CMOs to see what the impact is on international.” Leathem added: “I’m having calls with CEOs of other CMOs in the neighbouring rights world, we’re facing the same challenges. “This year, international collections are unlikely to be that badly impacted, but it certainly will be from next year and the year after.” Under their PPL PRS joint venture, the organisations have implemented a payment holiday for businesses including shops, pubs, restaurants and gyms during the lockdown. It will have an immediate impact on collections and distribution of payments to members. “We didn’t think it was appropriate that we were charging businesses for a period when they were not open and not using music,” said Leathem. “That’s been well received by the business community, by the relevant trade bodies and by government.”
Music Publishers Association CEO Paul Clements told Music Week that he was concerned about the potential loss of public performance income around the world. “It’s all going to depend on local strategies,” he said. “I’d encourage all of those societies to think very carefully about that, because even if they feel very generous now if they go about cancelling licences across the board, they’ve then got a lot of recovery work over the coming months and years.”
Leathem is confident that PPL PRS Ltd had taken the right approach, including pausing licensing bills and a halt on late payment charges. “It’s going to be harder for businesses like ourselves trying to receive payment of invoices [after the lockdown],” he told Music Week. “[But] the bigger concern is what businesses are going to be left after the worst global crisis in the last 100 years.”
“Once we get out of this, we want to make sure that people do pay it,” added Martin. “It’s really the only place where we gave some leeway [on licensing payments].”
Both societies have also worked to help the music industry. The PRS Emergency Relief Fund has raised over £1.2 million, while PPL has contributed £700,000 to three funds as well as backing the BPI-led fund. PPL has also brought forward a distribution covering April of £23.9m, which was paid on Thursday (April 30) to more than 15,000 performers and recording rights-holders.
The advance from the quarterly June distribution will provide support during the pandemic. It follows the Q1 distribution of £87.6m in March. “We just think that’s a sensible thing to be doing at this time, to try and help maintain cash flow,” said Leathem. “If you add up the March and April payments, that’s more than £100m that’s gone out to performers and recording rights owners in the last month.” PRS For Music made a record quarterly distribution of £174m in April. International collections increased by 19% year-on-year to £64.3m, while combined live (£18.3m) and public performance royalties (£21.4m) were up 68% on the same period in 2019.
PRS’ next scheduled distribution is on July 15. Because of the scale of data processing, Martin said there won’t be any advance payments. “What we’re focusing on is trying to maximise that [July] distribution as much as possible,” said Martin.
Both societies are also looking at the potential of unlocking unclaimed royalties from the so-called Black Box.
“We’re actually going to the board with some money that we think we could release,” said Martin, who noted that the amount is not large. PRS is looking at new licensing opportunities in gaming and livestreaming. But Martin acknowledged the huge impact in collections from the loss of concerts.
While PPL is less exposed by the live shutdown, it will lose income from recorded music at clubs and other events. It also faces a slump in broadcast money from the decline in radio advertising revenue. As they face up to the crisis, both societies will have to look at their costs, which if left unchecked will increase as a proportion of revenues. “We’re continuing making sure that our costs are efficient,” said Martin. “[But] it will be a challenge as we move forward.” The PRS For Music CEO stressed that the society will continue to work to support its members financially during the pandemic. “In a crisis, the only way to advance is to take decisions, be prepared and be proactive,” said Martin.
04 | Music Week 04.05.20
musicweek.com
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