The percentage of total income spent on costs by PRS For Music went up in 2014, despite overall revenue dropping by £8m.
[UPDATE: As noted in the graph below, PRS’s original stated income for 2013 was £665.7m. This has now been adjusted to £672.3m. Net distribution in 2014 has been confirmed at £593.1m.]
The organisation, which represents 111,000 music creators in the UK and two million worldwide, recorded combined royalty income across PRS and MCPS of £664.3m.
That was down on 2013’s income figure of £672.3m, but was up 1% on a constant currency basis.
Although PRS prides itself on being one of the most efficient PROs in the world when it comes to spending members’ money, it says its cost-to-revenue ratio rose to 11.4% in the year.
Cost-to-revenue ratio, which measures how much of the total revenue pie is spent by not-for-profit PRS on its upkeep and operations, grew from 10.5% in 2013 and 10.8% in 2012.
MBW estimates suggest that distributions to members will have fallen by around £12.6m in 2014, down 1.2% to £588.6m.
“Despite two office moves, a major systems upgrade and a dramatic increase in the volume of music usage to process we managed to contain our costs to budgeted levels.”
Robert Ashcroft, PRS For Music
The true figure will be revealed at PRS For Music’s AGM on May 19.
Publishers and songwriters will likely question why they were effectively squeezed twice in the year: not only was total PRS income down, but then the body spent a greater share of the total spoils than it did in 2013.
The probable culprits for this rise in costs are PRS’s office move to Kings Cross in London – something it says should provide longer-term savings – and the increasingly complex royalty processing burden created by the streaming age.
How the PRS For Music income broke down in 2014:
- £188.2 million was collected in royalties from overseas markets. PRS for Music maintained its export position on a constant currency basis, delivering nearly £1 million more than 2013.
- Revenue from emerging markets grew in significance as Latin America, Africa, and the Middle East delivered 37.8% growth on 2013, while Asia Pacific, dominated by the developed markets of Australia and Japan, showed growth of 2.2% on a constant currency basis.
- Revenue from the public performance of music rose by £6m to a new high of £168.3m.
- There were increases across all major tariff areas with the exception of pubs and clubs which continues to show a decline in the use of music.
- Television and radio continued to provide significant income to PRS for Music members with revenues of £165m, an increase of 2.9% on 2013.
- Commercial radio – driven by a recovery of the advertising market – helped radio revenues grow by 3.3% to £49m, while new licences with 25 television channels including Bollywood broadcaster B4U and 13 local TV channels contributed to the growth.
- The online market contributed £79.7m, an increase of 17.5% or £11.9m year-on-year.
- Revenues from the licensing of on demand TV and film services have grown strongly in 2014 with new deals established with Netflix, Microsoft Xbox, and Sony Playstation. Online royalties outstripped the royalties collected from the declining physical product sector for the first time, and royalties from streaming services (£38.8m) also exceeded those of downloads (£26.7m) for the first time. With the transition from downloads to streaming there was a corresponding increase in the volume of usage data processed from 130 billion to 250 billion individual usages.
- The recorded media market delivered £63.1m, 21.8% down from 2013 due to the continuing migration from physical product to online.
Robert Ashcroft, Chief Executive of PRS for Music, said, “Despite the impact of a challenging economic backdrop in key international territories, a strong pound and the decline of the physical market, we managed to achieve our budgeted revenues in 2014. We work hard to provide an outstanding service to members with the lowest possible charge to them.
“Despite the potential disruption of two office moves, a major systems upgrade and a dramatic increase in the volume of music usage to process we managed to contain our costs to within budgeted levels while at the same time increasing our distribution frequency to ensure that the money reached our members more swiftly than ever before.
“Though there remains much more to be done as we modernise PRS for Music’s operations, this was nonetheless a landmark performance in our centenary year.”
The 2014 PRS financial results will be presented at the Annual General Meeting at the British Library Conference Centre on 19 May 2015.Music Business Worldwide
