UK record labels’ trade income has reached a five-year high following five percent growth in 2016, new figures have revealed.
According to the UK record companies’ trade body BPI, combined revenues generated through streaming, music sales, performance rights and sync licensing rose by 5.1 percent to £926m last year.
The organisation noted that the £44.6m upturn on 2015 figures represents the largest annual total in five years.
A 61 percent increase in streaming revenues bolstered the overall numbers and went some way to offset the decline in income from physical formats and downloads.
Streaming now accounts for 30 percent of overall label revenues, compared to physical sales at 32 per cent.
The BPI said it was likely the growth in streaming would continue through 2017 to see the format overtake physical to become the leading contributor to label revenues by the end of the year.
It also added that, while the increase in revenues is to be welcomed, there are a number of structural challenges that inhibit growth, including illegal websites and the so-called value gap.
The value gap describes the growing mismatch between the value certain digital platforms, such as YouTube, extract from music and the relatively small amount they return back to the creators concerned.
The UK recorded music industry also faces stronger competition on global streaming platforms, the BPI warned, and it will need to work with government to ensure that, post-Brexit, UK artists retain access to EU markets and that weak Intellectual Property (IP) regimes are strengthened in key export markets.
Geoff Taylor, chief executive of the BPI and 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.’
Elsewhere, the figures show that while revenue from physical formats dipped below £300m in 2016, it remained the largest revenue stream for labels, declining by only 1.9 per cent.
The BPI said its resilience is testament to the enduring popularity of albums on CD, where income fell by less than a tenth (9.1 percent), and particularly vinyl, where revenue from LP sales rose an impressive 66.5 percent.
Vinyl LPs now accounts for 15 per cent of physical album turnover and 4.5 percent of total label revenues.