The vinyl revival and streaming subscriptions drove record labels’ revenues to a five-year high in 2016, figures out today show.
Trade income – which incorporates streaming revenues, sales across physical and download formats, performance rights and ‘sync’ music licenced for film, TV, games and advertising – jumped 5.1 per cent to £926m, according to the record companies’ association the BPI.
The £44.6m increase on 2015 was largely driven by a 61 per cent jump in streaming revenues, which accounted for 30 per cent of all turnover.
Physical sales accounted for 32 per cent in 2016, but streaming is expected to take top spot this year.
Vinyl LP now accounts for 15 per cent of physical album turnover, and 4.5 per cent of total label revenues, after sales grew 66.5 per cent over the year.
Despite a bumper year, the BPI today warned of challenges facing the industry: illegal websites; Brexit, because “UK artists retain access to EU markets, and that weak IP regimes are strengthened in key export markets”; and the “value gap”, which refers to the large value that platforms like YouTube extract from music with artists receiving relatively little in return.
(It is unclear whether YouTube, like Justin Bieber in the below “tune”, is sorry about this “value gap”.)
“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,” said BPI chief executive Geoff Taylor.
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.