PPL UK AGM speech

Fran Nevrkla, Chairman & CEO, PPL

Good morning ladies and gentlemen.

My daughter Sophie has just returned from a week in the Isle of Wight with her school. As usual, the first thing she did was to go to her room and listen to her music. She likes many different artists but her favourite CD is an anthology of recordings by the late, great Kirsty MacColl. As I sat with Sophie, listening to the distinctive voice and witty lyrics, I noticed that the foreword to the sleeve notes was written by the artist Bono in 2004. He clearly felt, as many do, that Kirsty MacColl was never fully appreciated as the truly great artist she was. But Bono went further and his words leapt out at me: “You judge a country by how it treats its artists, just like how it treats its nurses or its elderly. This is how we judge a culture…England has been at the cutting edge of pop culture for 40 years and its artists are the greatest in the world…still you get the feeling that for all the celebrity offered, being a musician in Britain is not a real job, like a painter, a writer or a film maker.” Sadly, what Bono said remains only too true.

Yet, it is the unmistakable sounds of great artists such as Kirsty MacColl, U2 and countless others from Lonnie Donegan to the Arctic Monkeys and from Sir John Dankworth to Maxim Vengerov which enhance our lives and make the world a better place. That is why today’s gathering is so significant. It is important for us here at this PPL AGM to show that, not only do those recordings bring great pleasure to millions but that they also bring recognition and rewards to those who created them. That is what PPL is about and that is what today's AGM is about. I am very proud to be able to say, on behalf of all my colleagues at PPL, that in 2006, not only did we generate record revenues in terms of airplay royalties, but we have also delivered the major reshaping of PPL to which you agreed last year.

Some of my colleagues will give you more details on the numbers and the major developments of the year, but allow me please to give you some of the headlines and strategy moving forward.

I am particularly pleased with the substantial increase of 17% in our public performance income and the truly remarkable 35% increase in dubbing revenues. Even the relatively small rise of 3% in broadcasting income is very pleasing because all these results have been achieved in a general business environment which is far from ideal and certainly not favourable in that last year we witnessed the highest number of business liquidations and bankruptcies ever recorded coupled with the broadcasting sector experiencing a further decline in advertising revenues. I am particularly thrilled about the sum in excess of £6 million of overseas income collected last year, especially as it represents an improvement of more than 100% on 2005 and also bearing in mind that as recently as five years ago PPL was collecting no overseas revenues at all. All this means that PPL together with its much younger sibling, VPL, generated income in excess of £110 million last year alone. If the 10% profitability margin still holds true in the music industry as a basic rule of thumb (and it may well be lower these days) then the £110 million figure represents the equivalent profit margin generated by an additional £1.1 billion sales of physical formats through retail outlets. And to cap all this, we have brought all the performers together within PPL through the merger with AURA and PAMRA, having been given unconditional approval by the OFT. 2006 will always be a landmark year in PPL’s 73 year history because, for the first time, the company fully represented both the musicians who record music as well as the companies who invest in those recordings.

We now have a PPL which truly represents the entire performer and record company community.

And not before time. For we now face challenges which could not even be contemplated just a few years ago, such has been the pace of change.

But one challenge we do not have to face is the popularity of our core ingredient – recorded music. Music is not only healthy, alive and kicking but thriving. The live music environment is thriving and more buoyant than ever. More and more private individuals have easy access to virtually the entire global repertoire of recorded music. A fast growing number of businesses throughout the world is aware of the power of music in advertising, selling and promoting their products and services and in expanding their businesses, increasing their profits and enhancing their working and business environment. The sheer power of music has been well recognised throughout the centuries and the philosopher Plato put it most beautifully when he said “If I can write the songs of the nations, I don’t care who writes the laws.” At PPL, of course, in today's complex world, we care about both.

Music is perhaps more popular than it has ever been. The challenges are all around our respect for the music and those who create it. Where is the respect for musicians, for studio producers and for record labels when their recordings are freely available through illegal sources? Where is the respect when people are invited to "rip it, mix it, burn it" with no reference to the creators and the integrity of their work? Where is the respect when recordings are used on a daily basis, whether for private consumption or for a business, and the performers and producers do not get paid? We should not be ignoring this as a society and PPL will continue to fight the corner for the creators and investors in the sound recordings.

After all, no previously successful supermarket could function in competition with an alternative business model literally next door making available identical goods, products or food in the same packaging and from the same suppliers, the only difference being that next door it is “for free”. That is precisely what the music industry has had to face up to and deal with over the last few years. We all acknowledge that our industry which for decades has been highly successful and very profitable is visibly going through one of the most difficult and painful periods of transition. It has become a popular pastime for many repeatedly to keep highlighting our problems and headaches, the continuing decline of sales of music in physical formats and other similarly cheerless and pessimistic statistics. Whilst we have to face many challenges, the music industry is not on its knees. Our business models are changing and our future income streams will look very different as our revenues become generated by myriads of different types of uses of recorded music everywhere. Some of these activities will be licensed individually and some of them collectively. Either way, they all have to be properly licensed and fully monetised. Music must NOT be “for free”.

It is inevitable, therefore, that record companies (big and small) and the entire performer community will depend increasingly on service organisations such as PPL to administer, manage and monetise the rights in the repertoire which jointly they have created. This is fundamentally important in the traditional environment and will become equally crucial in the digital world. It will not be possible either for individual record companies or for individual performers effectively to deal with potentially many thousands if not tens and eventually hundreds of thousands of new users and licensees. I am confident that by working closely together we shall find better, more effective and more customer-friendly ways of dealing with the new environment. By doing so we shall make certain that copyright is protected, rights are enforced and the use of recorded music on all platforms is properly licensed and paid for.

After all, at PPL we now do have the teams of talented people with the required skills, knowledge and experience as well as the desire to serve our constituents well. We also continue developing sophisticated systems and expanding our databases as essential supporting tools. We are ready for new challenges which we shall embrace willingly and with a sense of excitement.

Now to what is perhaps the biggest test of our respect for music. - Copyright! Everybody in this room knows the fundamental importance of PPL income to the performers and the record companies and the acute need to monetise all uses of recorded music. All this is only possible within a secure copyright framework which remains relatively fragile, uneven and unequal.

We all had high hopes attached to the Gowers Review of Intellectual Property which finally was published last December. We made a strong plea for and we contributed evidence and arguments in support of giving sound recordings a copyright term on a par with other creative works. It is no secret that most of us were deeply disappointed by the conclusions of the Gowers Review. It requires a substantial degree of ignorance not to mention cynicism to state that performers are not entitled to look to copyright for their “pensions” and then to suggest that in their old age individual performers should rely on exploiting their merchandising. Selling T-shirts, baseball caps and badges must be a fascinating prospect to ageing brass and wind players or string players, singers and others who no longer are able to work in their profession and practice their art because of health problems triggered by old age.

It is a sad reflection on the values of our society that 90% of all British performers have to exist on an annual income of no more than £15,000. These recent statistics become even more depressing when we remind ourselves that even the PPL income stream (which is becoming so important to all performers) is cut off 50 years after the first release of a record and therefore is denied to performers just as they enter old age. Why? Where is the political, legal, economic, let alone moral, justification for continuing this deliberate discrimination against performers and record companies compared with most other creators and others in the copyright environment.

Can it really be right that not only the written music and lyrics but all the artwork and other images and designs featured on CD packaging are protected throughout the life of each creator PLUS 70 years whilst the actual recorded performances, which are the main reason for the product being made available in the first place, lose all protection only 50 years after first release?

The answer is: this cannot be right and there is no justification for it. So what do we do? We fight on.

On a positive note, I want to mention the sea change that has been taking place in recent months. Politicians of all parties have been listening as the result of which they know our industry better as is demonstrated by a greater appreciation of our problems and long term issues in the IP rights environment and copyright enforcement. This is particularly true of the very recently published New Media and the Creative Industries Report produced by the Culture, Media and Sport Select Committee under the Chairmanship of John Whittingdale OBE, MP. The thoroughness, methodical approach and intellectual rigour which shines through this document is in sharp contrast with the results of other similar processes in recent times which simply lack these qualities. Thank you, John.

An enormous “thank you” must go to the 85 MPs who have signed the Early Day Motion on copyright term for performers and producers. This kind of cross party support is rare indeed and demonstrates that there are increasing numbers of Parliamentarians who do value what we do and are prepared to call for society to give it its true worth.

And the man behind that Early Day Motion, who has also gathered enough backing for a Ten Minute Rule Bill on copyright term, is Michael Connarty, MP. Some of you will recall that Michael introduced his first copyright-related EDM only days after attending our PPL AGM here two years ago. His latest Early Day Motion has garnered even more support thanks to Michael's eloquent advocacy.

Michael, on behalf of all the British record labels, big and small, and all the British and European performers, especially the “little guys” as you call them, I cannot thank you enough for all your passion, support and encouragement which is so invaluable.

Let us hope that the soon to be appointed new British Prime Minister will listen too. Not as a favour or indulgence to the music industry but very much on the basis that what we have to say is also in the medium-to-long term interest of "UK plc". Gordon Brown has rightly acknowledged the value of the creative industries and their importance for Britain's future, economically and socially. The recent Select Committee Report on New Media and the Creative Industries provides him with a timely summary both of the potential of the British creative sectors and the challenges they now face if they are to remain world class successes. Our message to our new Prime Minister will be: congratulations on your new post and we are here to help you turn your words into action by showing your support for British musicians, the creative industries and enterprise. Furthermore, by accepting the recommendations of the Culture Select Committte you will allow our great industry to continue to contribute to the creative economy in the upward economic and cultural growth of UK plc.

My biggest thank you of all must go to the performer community. Firstly, for embracing the recent developments in the PPL performer environment and also for responding so visibly and forcefully to our call for supporting the various copyright initiatives. The thousands of signatures on the PPL petition for equalising copyright in sound recordings speak for themselves. The subsequent letters which many performers wrote to their local MPs and other politicians were also a powerful indication of how strongly musicians, singers and others feel about the continued copyright discrimination. The enthusiastic cooperation we received from Sharon Donegan and her son, Pete, in connection with our Copyright Gap CD and related publicity and other initiatives, also spoke volumes. Thank you very much, Sharon and Pete, and many others for all your sterling work, support and encouragement. United we are strong and our collective voice can no longer be ignored.

We know that we have a long and hard battle ahead of us but we will persevere, with the combined strength of the performers and record companies within PPL, together with our friends and allies from across the music industry - John Smith at the Musicians' Union, Geoff Taylor at BPI, John Kennedy at IFPI, Alison Wenham of AIM and many others. After all, we are not asking for favours or preferential treatment, we simply ask for equality rather than second class citizenship.

In the history of mankind, music has never had an easy ride because of the perpetual struggle between the creative and the hum drum. Mozart, one of the greatest genius musicians and composers who ever graced our planet, was a rebel throughout his relatively short life. It is a well documented historical fact that when in his early musical career in the services of the Archbishop of Salzburg, Mozart seriously displeased his benefactor and employer, the Archbishop kicked him down the stairs. Luckily for us all, it is Mozart who left a timeless and everlasting legacy through his beautiful music who continues to be celebrated in each century across the globe whilst the infamous Archbishop is virtually forgotten for all time and ironically is only remembered because of the incident to which I refer.

When writing to a music philistine the French composer Erik Satie said the following: “Dear Sir and Friend, not only are you an arse but you are an unmusical arse…”

I can assure the whole performer community and all our several thousand record company members that PPL will continue to play a very active and determined role in the wider arena. At the same time, we shall never forget or neglect our primary role in safeguarding and enforcing the rights of all our constituents whilst maximising the income earning potential of the repertoire in which they kindly vest the rights in us.

We are painfully aware of the enormous challenges facing our industry. Let me assure you that here at PPL, you not only have a professional and high calibre team at your service, but also the absolute commitment to ensure that, somehow, you get the rewards you deserve for your recordings. Respect where it is due. And we shall continue striving for absolute perfection in terms of the range and quality of the services we offer.

Behind this commitment are the twin engines that drive everything forward and without whom we would achieve nothing. Firstly, the PPL Board Directors, the Performer Board and the Performer Guardians who have steered PPL through the performer merger and beyond. My thanks to you for your professional counsel, business focus and loyalty to our industry. Secondly, to all the staff at PPL and VPL, who work tirelessly for every pound that goes into those all important distribution cheques. Their hard work and good humour are an inspiration to all of us and, dear colleagues, I thank each and every one of you.

I did not promise to be entirely brief because with so many friends who have helped us achieve these results I did not want anyone to be short-changed. And now a warning about next year. We will achieve even greater things, with even more friends so I may speak for even longer...! And the royalties will go up...!

Thank you for listening and onwards and upwards!