PRS for Music CEO Robert Ashcroft on recent developments in the UK music industry
Since the beginning of the year the music industry has been back at the top of the news agenda. While the news itself may not always have been positive, the interest the public, government and press continue to show demonstrates the vital role our industry plays in the life of the nation. The business might be changing, as it always has, but we lie at the heart of the creative sector and help to make Britain a global cultural leader – a message often lost in the headlines.
By way of a reprise of some of this news, on 1 February it was announced that ownership of the last UK major record label, EMI, had passed to Citigroup, who had been the group’s major creditor. The bank had loaned money to Guy Hands and his private equity vehicle Terra Firma in 2007 in order for the previously un-initiated music executive to buy the label. From the initial purchase, all parties involved were rarely out of the news. From rumoured artist walkouts, disputes about the price paid, controversy regarding advice given and taken, to the court case that eventually decided the fate of the company, EMI was centre stage.
As the media followed every twist and turn of the saga, staff at EMI Music and EMI Publishing managed to retain the majority of the writers and artists they had signed, broke new talent including the likes of double BRIT winning Tinie Tempah, launched progressive deals for their artist roster and streamlined the organisation. They even announced, under the leadership of Roger Faxon, an increase in A&R investment, bucking an industry trend. As rumours of a sale and break-up continue, let’s hope that the good work of breaking, developing and investing in new writing and performing talent continues. Regardless of corporate ownership, that is what really matters.
HMV is another British music institution that has been grabbing headlines recently. With the closure of former music retailers Woolworths, Virgin Megastore (later Zavvi), Tower Records and a range of independents, HMV is the last major outlet for physical product on the high street. No business can ever stand still, and under Simon Fox HMV has diversified into live music and extended its product range. The public is buying fewer CDs in total, though online sales are growing, reflecting the relentless competition from digital rivals faced by all retailers. It is not surprising that the organisation should have needed to streamline some of its stores and re-examine its business model.
The good news is that HMV is still profitable, still selling CDs and enjoying the unwavering support of the record industry. There are many who still enjoy music on CD and DVD, countless music lovers who have not ‘gone digital’ and there is still a role for HMV. Many have been quick to write off the business, but I firmly believe that with a strong business plan, a clear strategy and the backing of the industry, HMV can continue to be a player within our sector.
While most in the media focused on the negative aspects of this story, many positive aspects of our business have been overlooked. British music is still a formidable force State-side, with Adele making headway in the Billboard charts, and Muse, La Roux, Paul McCartney, Iron Maiden and Stargate all picking up Grammys.
The 2011 BRIT Awards demonstrated to the world not only the talent we have in this country, but also the importance we attach to music in the UK. Take That’s forthcoming tour has set records for ticket sales, and festivals continue selling out for the summer season.
From our own perspective at PRS for Music, British businesses continue to appreciate the value of music. New digital services for example, despite some of the underlying assumptions that appear to have animated the Hargreaves Review, see music as vital to their business plans. We witnessed this at close range on 11 February when we hosted the first IC Tomorrow workshop. The aim of the workshop was to help new digital start-ups understand music licensing at an early stage in their development, and it was very well received.
The advertising market is also showing signs of growth, which is good news for the commercial radio and television sectors, both large consumers of music. Meanwhile on another front, we welcome the announcement by Google last December that they are to take steps to reduce the likelihood of Internet users’ being directed to unlicensed content via their search engine. In particular, removing certain piracy-related terms such as the word ‘torrent’ from their auto-complete feature is a very positive development. This is but one example of the kind of benefit to be derived from the industry roundtables that have been organised by Minister for Communication, Culture and the Creative Industries, Ed Vaizey.
Overall then, while some of the big picture view may be lost in the headlines, the fact that this industry is still such a draw for commentators from all sides underpins its importance and relevance. If no interest were shown, and no headlines written, we would really have something to worry about.
Robert Ashcroft is Chief Executive of PRS for Music