British music licensing company PPL revealed today (September 30) that it has paid out £30.4 million (nearly $40m) in international revenue collected from 48 collective management organisations (CMOs) around the world as part of its Q3 2020 distribution.
Over 23,000 performers and recording rightsholders received a payment either as direct members of PPL or indirectly through other CMOs.
PPL collects money overseas where recorded music rights exist for radio or TV broadcasting, cable retransmission, public performance, private copying or dubbing.
Across all distributions made to date in 2020, of both international and UK revenue, PPL has now distributed more than £200m ($257m).
PPL reports that the Q3 distribution included “significant payments” from CMOs in Denmark, France, Germany, and the USA.
In addition to the international revenue, also included in this distribution payment is more than £1.5 million from PPL’s sister company VPL, which licenses music videos when they are played in public or broadcast on TV.
The revenue being distributed to independent recording rightsholder members of VPL and other CMOs relates to the use of their music videos by MTV’s channels across Europe, the Middle East and Africa.
PPL states that its ability to collect this money is in part down to the breadth of its global relationships, with over 100 agreements with CMOs across Africa, Asia, Europe, and North and South America.
These agreements ensure that those for whom PPL collects internationally – including stars like ABBA’s Björn Ulvaeus, George Ezra, Jade Bird, Rita Ora, Sigala, Tom Walker, and tens of thousands of other performers and recording rightsholders – receive payments based on the use of their recorded music around the world.
MBW recently spoke to PPL CEO Peter Leathem (pictured) to find out about the organisation’s work globally…
Where are the biggest opportunities in the royalty collection sector currently?
The neighbouring rights market has grown in value from $1.4 billion in 2010 to $2.6bn in 2019, according to the IFPI, and for many performers and recording rightsholders these royalties will have significantly grown as a component of their overall income. The long-term trend for neighbouring rights was continued growth and we believe this is still going to be the case, despite the current adverse impact of COVID-19.
“The long-term trend for neighbouring rights was continued growth and we believe this is still going to be the case, despite the current adverse impact of COVID-19.”
This growth will arise due to a range of reasons. For example, better licensing market penetration, improved tariff values, greater efficiencies in operations driven by collaboration and music industry data and technology initiatives, and rights being established in countries that previously had no neighbouring rights laws. Currently only around one third of the countries in the World have neighbouring rights.
In the three largest economies in the world, for example, music users are not required to obtain a licence for the broadcast or public performance of sound recordings in the US and China, and there is no public performance right in Japan.
How competitive is the sector at the moment?
PPL’s entry into the international neighbouring rights market in 2006, with a commercially minded approach, has driven up the performance of the sector overall to the benefit of performers and recording rightsholders.
There are many organisations who now provide these services, each competing to increase income in this fast growing part of the industry.
“We offer a highly competitive service, being a leader in worldwide royalty collections and clearly adding value to the many performers and recording rightsholders who appoint us to collect on their behalf.”
We offer a highly competitive service, being a leader in worldwide royalty collections and clearly adding value to the many performers and recording rightsholders who appoint us to collect on their behalf.
In 2019, we collected £271.8 million in revenue, with almost one third – £86.7 million – coming from international collections. Our international collections grew by 22% on 2018’s total (£70.9 million), which in itself was up by 43% on 2017’s total of £49.6 million.
What are the benefits for a performer of choosing PPL to handle their royalty collection, particularly internationally?
Our highly competitive international service collects royalties from around the world thanks to over 100 agreements in place with CMOs across Africa, Asia, Australia, Europe, and North and South America. These agreements allow our members to benefit from not just established music markets but also as-yet untapped potential in markets across Africa and Latin America, which are predicted to contribute significantly to the future revenue of the music industry.
This service is underpinned by a team of neighbouring rights experts who manage the rights of our 95,000 internationally mandated performers and recording rightsholders. This team uses its in-depth knowledge of the global neighbouring rights landscape to actively drive revenues from the market, rather than act as a passive collector, as well as to support the introduction of neighbouring rights where they do not currently exist. Our scale of collections also allows us to have efficient currency management processes in place to deliver optimal revenues for members.
We also have an experienced Member Services team that helps our members manage their recording repertoire, improving the flow of revenue. They work with performers and recording rightsholders ranging from ABBA’s Björn Ulvaeus, Chrysalis Records, George Ezra, Jade Bird, Rita Ora, and Sigala, through to self-releasing artists or session musicians. In 2019, we responded to tens of thousands of queries from our members, added more than 2 million individual performances on recordings, and processed over 144 million lines of rights data provided to us by recording rightsholders and CMOs.
“We support our members by working with a number of music industry organisations to secure greater government support in the UK and around the world for the future of our sector.”
We also educate and inform our members on industry issues, providing more than financial support; throughout 2019, PPL hosted or supported 210 events in the UK and internationally. In 2020 we have transferred this schedule online, hosting virtual sessions ourselves and with industry partners to help performers and recording rightsholders make the most of their membership, and to also educate the wider industry on the rights we collect for.
Lastly, we support our members by working with a number of music industry organisations to secure greater government support in the UK and around the world for the future of our sector. In the last few months, we have joined signatories from over 120 organisations in writing to the Chancellor of the Exchequer, The Rt Hon Rishi Sunak MP, to extend government support for freelancers working in the performing arts and entertainment industries.
We have also, together with the Musicians’ Union, PRS Foundation, UK Music and others, raised concerns with the Secretary of State for International Trade, Rt Hon Liz Truss MP, about the increased cost of US visas. Members of our Executive management team have also travelled to India, Japan, Kenya, and Malaysia in the last year to meet with international stakeholders and policymakers to build relationships and encouragement the development of neighbouring rights in those markets.
In 2019 PPL collected £86.7m internationally for performers and recording rightsholders – tell us how that collection figure reflects the work that PPL is doing internationally?
In addition to the 100-plus agreements we have in place with CMOs around the world and the support we provide to encourage other markets to adopt neighbouring rights legislation, much of our work focuses on improving data quality in the recorded music ecosystem. Improving data quality is key to being able to pay out more money, more quickly, to more performers and recording rightsholders around the world.
We are a board member of DDEX (Digital Data Exchange) and, in collaboration with other organisations across the industry, we contribute to its work developing and promoting the use of data standards, which make the capture and exchange of large volumes of data more efficient and enable more automated data processing. The use of DDEX standards have been core to global projects such as the Repertoire Data Exchange (RDx) and the Virtual Recordings Database (VRDB).
RDx provides an industry-first: a centralised data exchange hub that allows multiple record companies to deliver authoritative recording and rights data to multiple CMOs in a standardised and transparent manner. Commissioned by IFPI and WIN and built and operated by PPL, RDx simplifies the data registration process and, in turn, will improve the accuracy and timeliness of royalty payments from CMOs back to rightsholders.
VRDB, operated by SCAPR, the global body that represents performer CMOs, is a database that aims to increase the efficiency of exchanging data between CMOs to support international royalty payments. More accurate data enables more accurate royalty payments, and PPL performer members have already seen the benefits of the VRDB in certain countries. SCAPR also operates the International Performer Database (IPD), which assigns IPNs to each unique performer, helping to prevent errors in performer metadata. As a board member of SCAPR, PPL is working to drive the adoption of these initiatives across the industry, contributing to the organisation’s goal of improving the efficiency of rights management.
We also partner with individual companies who share our goal of improving data quality in music metadata. We work with Session (previously known as Auddly) and Sound Credit to encourage the early capture of performer data in the studio, helping to improve the quality of performer information in the data supply chain and contribute to the efficient distribution of royalties.
“We are always keen to exchange ideas on best practice and share knowledge with our counterparts around the world.”
Through membership of organisations such as SCAPR and DDEX and our industry-leading data and technology infrastructure, we are helping performers and recording rightsholders receive royalties more efficiently. The launch of our Business Services division reflects this in its support for other CMOs in processing parts of their neighbouring rights distributions. Established in 2016, the service now helps seven CMOs in Estonia, Ireland, Lithuania, Malaysia, Nigeria, Portugal, and Switzerland with their distributions. The service can help to lower the local CMO’s operating costs, leaving more money on the table for their members.
We are always keen to exchange ideas on best practice and share knowledge with our counterparts around the world. In 2019, we welcomed a delegation of senior officials from developing countries to learn more about performance rights management in the UK and the work of PPL, as part of an annual training programme run by the British Copyright Council (of which we are a board member) and WIPO (the World Intellectual Property Organisation). We also hosted a three-day workshop for our CMO colleagues from the Caribbean and Latin America on the collective management of sound recording rights, and in early 2020 hosted over 100 delegates from CMOs that are members of SCAPR, discussing how we can best work together on global rights management and help royalties more efficiently reach performers and recording rightsholders around the world.
By contributing to the best practice of the global neighbouring rights community, all performers and recording rightsholders, including our members, will benefit from more efficient royalty payments.
PPL celebrated its 85th anniversary recently – what are some of your proudest achievements in recent years and looking to the future, what does the organization still hope to achieve?
In its lifetime, PPL has collected over £3.4 billion, with £2.8 billion of that collected this century. This is thanks in part to the extensive upgrading of our backroom operations, such as our repertoire database, our member management portal, myPPL, and our distribution processes.
We brought a new level of professionalism to royalty collections. With a 21st century IT infrastructure in place, we made sure that we were able to not just deal with but make the most of the increasing data streams generated by the modern music industry. This technological innovation has played a significant part in our financial growth and also helped us to play a major role in the global effort to standardise and streamline music metadata. Performers and recording rightsholders recognise this, and we are proud to be able to represent such a range of diverse talent, including both independent and major record companies, together with performers ranging from emerging grassroots artists through to established session musicians and globally renowned artists.
“With a 21st century IT infrastructure in place, we made sure that we were able to not just deal with but make the most of the increasing data streams generated by the modern music industry.”
The establishment of PPL PRS Ltd in 2018, our joint public performance licensing venture with PRS for Music, was a significant step-change in how the two companies collect public performance licence fees. It makes licence coverage more comprehensive, so increasing royalty revenue, while also cutting costs as two separate licensing operations are brought together into one, leaving more money on the table to distribute to each of PRS for Music and PPL’s respective members.
PPL recently launched an internal Diversity Forum. Could you tell us about the launch of this forum and your efforts in this area generally?
On June 2, 2020, PPL stood in solidarity with the Black music community. PPL recognises the importance and the benefits a diverse workforce can bring and Black Out Tuesday provided a period of reflection for us to take a deeper look at our efforts in this area – and whilst we had been previously recognised for our diversity initiatives, we agreed that we needed to do more, and do better.
The Diversity Forum was part of our five-point pledge made in response to the letter from the Black Music Coalition. The pledge set out PPL’s commitment in the areas of training, support services for Black members of staff, funding for Black organisations, and career development, amongst other things. On the 17 June 2020 we launched the Diversity Forum, which has an open remit to suggest ideas for change and to challenge existing processes and structures. The forum consists of 28 employees and the first meeting took place on the 7 July and the forum have continued to meet monthly since.
One of the first actions to come out of the forum’s discussions is an anonymous Equality Diversity and Inclusion Survey of PPL employee’s. The aim of this survey is to help us evaluate PPL’s company culture in relation to Equality Diversity and Inclusion and to identify areas for improvement and prioritise ideas and suggestions to take forward.
In conjunction with the survey results, the forum will be focusing on a number of key areas: how we approach recruitment and opening other doors to career opportunities such as apprenticeships and internships; how we develop, reward and train our staff and support their wellbeing; and how we engage with them on equality, diversity and inclusivity issues.
The forum is already helping us to change some of our practices: in recruitment we have started rolling out the use of anonymous CVs to reduce unconscious bias, and we are currently building a programme of external and internal events to celebrate black music creators and industry staff as part of Black History Month. The Diversity Forum also seeks to engage with external organisations and individuals within the industry to share ideas and insights on the subject of diversity.
We also committed to reviewing diversity on the PPL Boards, a focus which is already delivering results. At our recent AGM we welcomed to our Board three well regarded industry professionals in Soriya Clayton (Demon Music Group), Charlotte Saxe (Warner Music UK), and Joy Ellington (VP Records). They will bring a wealth of expertise to our leadership as Board directors and their election also marks a positive step towards improving diversity, equality and inclusion at PPL.
How has the pandemic impacted your operations, particularly internationally, this year and how has PPL overcome those challenges?
Due to lockdown and the forced closure of bars, pubs, clubs and other recorded music users, there will be a significant impact on licensing revenues as a result of COVID-19. In 2020, we are currently expecting a decline in UK revenue of 30% on 2019. The biggest decline will be in public performance licensing as shops, bars, nightclubs, offices etc have been closed for a significant period of time.
There will be less of an impact to PPL’s broadcasting revenues as a result of existing blanket agreements particularly on the TV side, but there will be a decline in revenues collected for commercial radio as we receive a licence fee based on a percentage of advertising revenues, and those revenues have understandably fallen during the pandemic.
International collections and distributions are likely to remain strong in 2020 as the vast majority of the collections are for 2019 and earlier. From 2021, we expect a decline in collections as other collective management organisations’ (CMOs) start to pay-out 2020 revenues as they will also be experiencing the same issues as the UK in terms of public performance and broadcast licensing in 2020.
However, the pandemic has also shown our industry at its best, coming together to help those in need. In April, PPL brought forward a distribution of £23.9m which was paid to over 15,000 performers and recording rightsholders, made possible by our well-developed distribution systems and the hard work of our staff. This was an advance payment on PPL’s usual June distribution and followed an earlier quarterly distribution of £86.7m at the end of March.
Added to the June distribution it brought the total paid out in the first six months of 2020 to nearly £175m. Our Q3 payment is expected to be another important distribution, taking the total amount paid to performers and recording rightsholders in the UK and overseas this year so far to more than £200m.
We have also supported the wider industry by contributing over £1 million to hardship funds established by Help Musicians, the Musician’s Union, the Association of Independent Music (AIM), the British Phonographic Industry (BPI), and the Music Managers Forum (MMF) as well as to other good causes. PPL PRS Ltd, our licensing joint venture with PRS for Music, also introduced a number of measures to ease the pressures on businesses across the UK affected by the pandemic.Music Business Worldwide