PPL CEO Peter Leathem: “Organisations like the Musicians Union have noticed that some members were having to leave the profession just to make money”
There have been few constants in the music business in recent years, but one thing performers and labels have been able to rely upon is PPL income.
The collection society, which licenses recorded music for broadcast and public performance, has experienced remarkable growth in recent years, with annual income more than doubling between 2009 (£129.6m) and 2019 (£271.8m).
But even the greatest winning runs have to come to an end eventually, and the small matter of a global pandemic saw PPL’s 2020 collections, announced today, drop 17% to £225.7m.
All sectors were hit: public performance and dubbing fell 42.2% as shops, pubs and offices closed; broadcast and online was down 3.8% as commercial radio advertising was affected; and even international, unstoppable in recent times, slipped 0.9%.
But there is some important context: even after the unprecedented disruption, it was still the collection society’s third highest figure in its 87-year history. And CEO Peter Leathem – one of the few music business executives to escape from the DCMS Committee inquiry into the economics of music streaming without being savaged by MPs – still finds plenty of reasons to be optimistic.
So, as the UK slowly opens up again, I got on a Zoom call with the PPL boss Peter Leathem to talk coronavirus, increased competition and what lies ahead for the sector…
Given the circumstances, how do you rate PPL’s 2020 performance?
“We actually performed slightly better than I thought we would do. Clearly the pandemic meant that businesses, whether shops, bars or offices, were closed for a significant amount of time. So the decline in public performance and the related dubbing services is understandable, actually. But the broadcast and international sides performed better than I thought they would, and that’s been helpful.”
It was still PPL’s third best year ever. Does that bode well for recovery?
“We’ve had so much growth at PPL over the years that we’ve got used to doing better and doing more things – so it’s quite interesting that it’s still the third best collection, even though we were heavily impacted on the public performance side. It indicates what a growth pattern PPL has been on in recent years. The pubs are open now and if we go on a happy path from here, we’re going to have more open this year, so we do anticipate that we will have growth in our public performance income this year, as compared to last. It’s clearly not to get back to the position we were in pre-pandemic yet, because we’ve got things like closures.”
You’ve gave businesses a licensing holiday while they were under lockdown. Is that side of things coming back now?
“Yes. We’ve been concerned that we’re going to have a number of distressed businesses that are coming back to try and operate, and we were slightly worried about what sort of level of dialogue we’d have with them about licensing and music use. But, actually, at the moment it’s been pretty positive, because people are just happy the restrictions are coming off and they can start to trade again. However, the industry data is showing that there’s something like 8,500 licensed premises that have closed during the pandemic. Do I think they’ll come back? Yes, I do actually. But there’s going to be a bit of a lag. We have to have much more direct personal contact with licensees to work out when they were open in Wales, Scotland – there are a range of things to do. There’s a high workload but we’re definitely seeing businesses coming back and wanting to get themselves licensed.”
A lot of big names have disappeared from the High Street in the last year. What will that do to licensing income in the long term?
“It will be a journey getting back to where we were but, for public performance, we’re very confident there will be growth going forward. Music is more popular than ever in driving ambience, employee productivity, increased dwell time in shops, increased propensity to buy – all those positive things are still there, so really it will be just a couple of years of adjustment as we get licensing going again.”
International revenues remained strong – is there a delayed Covid impact coming in that sector?
“Yes. Most international collections have got a slight delay. During 2020 we were mostly dealing with the collections other Collective Management Organisations (CMOs) had made in 2019 or earlier. That means there will be more of an impact this year and in the years to come. And also, around the world, they’re not necessarily getting on top of the pandemic as well as we are with the vaccination process in the UK. That figure of £85.9m [for 2020 international collections], we are unlikely to be achieving that level in the next year or two.”
The likes of BMG, Downtown, Peermusic and even Sony (via its acquisition of AWAL) are now in the neighbouring rights business. What does that competition mean for PPL?
“We’ve actually had competition for a long time. But it’s worth remembering that the competition is only really focused on the top end. Across the 40-50,000 performers that we’re collecting internationally for, it’s only the top 1,000 or so that people are competing for really. So yes, there have been extra entrants to the market, but it’s always been a very competitive marketplace. And, as far as PPL’s concerned, we have a very strong offering. We’ve been growing our representation of performers quite significantly every year and we can see we’re being successful in the face of that competition. Competition has been good for performers: they get collection services in more territories, with a better service, a better price point, all driven by that competition. We believe that we still provide the best of those services, but everyone’s had to up their game and that’s good for performers.”
The trend in most sectors is for consolidation. Will that also happen in neighbouring rights?
“You’d have to say that there would have to be some consolidation. People will have a go at things, work out if they can make it work or not, and if they can’t, they can’t. Partly because PPL is a very public operation, and we’ve been publishing quite large increases in international collections in recent years, there’s been much more awareness that there is a couple of billion dollars market out there, so more people want to see if they can provide services. It’s still quite an immature market and over time you’d expect some consolidation. But there are a lot of players at the moment.”
Can the international market really keep expanding the way it has been?
“One of the reasons why there is interest in neighbouring rights is, it’s going to keep growing. Unlike the songwriter/composer market, where there are rights in pretty much every country in the world, only about a third of countries have rights for record companies and performers. That can only increase. So there’s a pretty positive view about the market growing over the years to come, hence supporting new entrants to come in and see what they can do.”
Are you anticipating any changes to PPL’s operations in the light of the DCMS music streaming inquiry?
“I wouldn’t like to predict the outcome of anything, we’ll just wait to see. We obviously look after the major record companies, the indies, the featured and non-featured performers, studio producers… There is a range of views within that sector, so our job is to let them do their advocating as to what each of them thinks should happen in terms of equitable remuneration (ER) or not. But if there was a decision to have ER [in streaming] then PPL would be pretty well-placed to provide services, it would just be scaling up what we currently do.”
What will be the long-term impact of the pandemic on PPL members?
“Organisations like the Musicians Union have noticed that some members were having to leave the profession just to make money and get a job as a delivery driver. At the moment, it’s hard to know whether we’ve lost people for all-time, or what the attraction of [returning to] music is going to be. I feel very confident that the popularity of recorded music and the desire for it to be used by business is still very strong. We can continue to drive efficiencies in how we operate, we’ve got a global market which will grow. UK music exports incredibly well, which means that growing market is very valuable to our members. Clearly the pandemic has put a few years of impact on that but, beyond that, I don’t see why the other trends of growing revenue, greater efficiency and greater collaboration won’t continue.”
