BPI Chairman Tony Wadsworth AGM Speech, 9 July 2010
This year, Britain celebrated a hatrick. No, not the third time in a row that we failed to get beyond the opening stages of the World Cup.No, it was the third year in a row that the world's best selling artist was British, with Susan Boyle following in the footsteps of Coldplay and Amy Winehouse in achieving this feat.But the other stand-out stat for 2010 is that it is the first time in six years that UK trade revenues increased. OK, so it was by 1.4% - but given the growth rate of the whole economy is 1.2%, we will take it. This change in direction can in no way be a cause for celebration, still less grounds for complacency. There is still an enormous of work still to be done: the definitive magic bullet on digital remains elusive, as does the best means by which to combat the impact of illegal filesharing.
Perhaps we can sometimes spend too long contemplating the effects of piracy on our revenues and dwelling on what might have gone wrong.
So,instead , I'd like to spend a few minutes looking at what is going right.
First, fans still find CDs the most popular way to get music - 87% of albums are still sold in this way. I heard someone say the other day that record companies are pushing an "antiquated" business model. It is a particularly odd - not to say utterly dismissive of the consumer - to describe a sector which is meeting the needs of over 112 million fan purchases as being out-of-date. That's not to argue against the fact that there is a drop-off in CD sales, but it is incredible that when a glass is well over four-fifths full that some people seem so determined to focus on the missing fifth.
Second, fans love getting music online too. Last year saw a 56% increase in digital album sales. There are now 59 legal ways to get music online in the UK. It's hard to think of that many different branded outlets for anything. There are five major supermarkets, five major high street banks, four major petrol retailers, five major ISPs. Don't tell the music industry that we have the problem with adapting to the digital age!
Thirdly, there's the diversification of revenue streams.
The recorded music business is now a lot more than simply a transaction via retail.
Models based upon licensing, streaming, advertising supported revenues, merchandise, profit shares and 360 degree deals ,etc are delivering growing revenues to our business.
So, with these grounds for cautious optimism as abackground, but with the desire to see even more improvement front of mind, the BPI has been in the thick of it in the political realm, if you will forgive the tv reference. The Digital Economy Act is a major benchmark for music and all creative sectors, because for the first time Government and Parliament have decreed that ISPs should play their part in the digital copyright world. Being such a prominent voice in the debate brings its own challenges. Striving for such an important goal is always likely to arouse opposition in some quarters - and some of the anticreative industries comments on the blogs were enough to make a roadie blush.
But we have been successful in countering these voices, and in winning the broader debate on the value of creativity, through solid argument, backed up by our belief that music has real value in our society. Our position has been supported right across the political spectrum, and in influential sections of the media.
Another area of success this year, not just for the BPI but across the entire British music family, lies in the decision of the BBC Trust to counter the BBC management's proposal to close 6 Music.
It is fantastic that the voices of thousands of real music fans, musicians and the music industry itself have been heard loud and clear by the BBC trust and I am proud of the role that the BPI was able to play in that.
Many of the points that we made in our meetings with Sir Michael Lyons, Mark Thompson and senior BBC management have been played back to us in the Trust's response that was published this week. So , it looks like good news, but we will be keeping a close eye on events going forward to ensure that 6 Music gets the long term commitment that it deserves from the BBC.
But the wider point - and the reason I felt so strongly about this issue and was ready to fight for it - was because this is not simply about 6 Music, even though it's a great station. I saw this as more of a general issue around the BBC's support for music.
Like all music fans in this country I pay my licence fee and expect the BBC to deliver quality, distinctiveness, and to take creative risks that the commercial sector often find difficult to take. The warning bells for me came with the proposal to shut 6 Music apparently on the basis of its relatively low audience numbers. If that starts to become the yardstick which dictates musical policy then we will very quickly start to see a BBC that isn't distinct, that doesn't take risks with new music, and that falls short of its duty to its listeners - the licence fee payers. At the moment the BBC plays a huge amount of new, untested music; it sometimes goes out on a limb, and introduces listeners to new sounds and new styles. This is invaluable to the cultural fabric of this country and plays a large part in the vitality of our music scene over the years, and hopefully for years to come.
Many musicians and small labels would get no radio exposure if it weren't for the BBC, and the PRS and PPL money that they earn is sometimes a critical part of the income that enables them to continue as musicians.
So, I say to the BBC: "look at what you do for new music, for niche music, for archive music, and be proud of it, celebrate it, build on it; don't be driven off course by this blizzard of negativity coming at you from various quarters. The BBC music offering, especially on radio, isn't just about audience share and never should be - please don't lose sight of what you do well - Radio 1 , Radio 2 , Radio 3 , and 6 Music are as good if not better than any other music radio group in the world." I hope the BBC management and the BBC trust appreciate that fact, as they are the custodians of some of the best broadcasting brands in the world .
Finally, I'd like to make an observation about breaking new music, and the need to keep it as our main focus - I think we all agree that breaking through with new artists is a sign of a healthy industry.
Since the downturn in revenues 10 years ago, the industry has really started to put its house in order as far as its costs are concerned. And it has made a virtue of this necessity: on the whole we are a fitter, more efficient and streamlined industry, and we are now in a good place to take advantage of the upturn in revenues that will come from the digital business.
However, a note of caution. This streamlining must not go so far as to start to have a negative effect on one of our most important functions: investing in new artists. To borrow a topical phrase, in an age of austerity we have to maintain our commitment to frontline services.
Despite the financial limitations that we face, we must do all that we can to maintain the level of activity around new artists. There may not be as much money to invest as there used to be, but I believe that shouldn't mean that we support fewer artists. Because I think if we do that, we will miss out on potential stars of the future. Focusing investment on a smaller number of artists may be efficient up to a point, but it opens us up to the risk of diminishing our access and our contribution to the immense pool of creative talent in this country. That could mean less vibrant music scene, and in turn, fewer successful music companies.
Paul Williams made the point in this week's Music Week that albums can still sell in good numbers - there just aren't enough of them. I think that's true. We all know that part of our business is release schedule driven - yes we are affected by macro economics and by structural factors like file sharing and so on - but we also know that a great release schedule can drive the market. And in my experience of running a record company, I found that what makes a great release schedule is simply great music. But that great music doesn't just fall into your lap. You have to be out there investing, often in artists that won't become stars. But I know that if you don't make that investment - if you don't spend that time - you won't get to the successful stuff either.
So please let's do everything we can to maintain our development of new artists.
Yes, we should spend more wisely, get into commercial partnerships to make the money go further, even work with public money where that is available.
But lets not go down the route of focusing the investment into fewer and fewer artists. It may serve a short term need to consolidate, but I feel that in the long-run we will live to regret it.
So, as we look forward I am keen that the BPI builds upon the successes of this year and works with members - and where necessary with government - to create the climate within which our business can continue to grow.
Regardless of illegal filesharing, it is imperative for artists and music companies to be looking at ways to increase their profile in the digital world. As other sectors, like print journalism, books and films, start to get to grips with their own issues, we have much to learn from each other.
As the representative voice of the recorded music industry the BPI will continue to make itself heard with all of our key audiences. And in so doing, we will convey three key messages: British music is the best in the world, it is constantly developing new ways of meeting digital demand and, provided we have a strong, yet flexible copyright framework in place, we can continue to evolve and grow.