On-line Royalties Exceed CD Shortfall

The UK’s Performing Rights Society (PRS) announced their financial results for 2009 today and for the first time, the growth in royalties from on-line music exceeded the fall in revenue from the sales of CDs and DVDs.

The PRS reports that on-line revenues in 2009 grew to a little over £30m, which was an increase of just under £13m, but revenue from CDs and DVDs fell by over £8m.  This is the first time that the growth in on-line music has overtaken the fall in the sales of traditional media.

 The PRS is the approximate equivalent of ASCAP in the USA and total revenue for the year was £623m, a growth of 2.6%.  Most of the PRS’ income comes from other sources, such as licence fees for broadcasting and playing music in shops and other businesses.  Recorded media such MP3s, CDs and DVDs is actually the smallest of four revenue streams.

Regardless of what we might think of organisations like the PRS, ASCAP, MPAA, etc., I’m pleased to see these results.  First of all, it will make a musicians and music publishers take the on-line sales of music more seriously if the revenues from on-line sales are (potentially) greater than CDs.

Secondly, it would appear that easy availability of competitively price music appears to be making it less attractive to “pirate” music.  Of course, this is conjecture and probably has much to do with MP3 players extending to social groups who are not technically-savvy.

Thirdly, while I’m not privy to the exact royalty percentages taken by the different formats, it perhaps indicates that even during an economic downturn, people are still buying music.  Perhaps on-line music comes off better, as it’s easier to buy a 99p track than a £10 CD.

Finally, it’s probably not good news for the few bricks’n’mortar music stores which still sell CDs and DVDs.  If Amazon has already eaten their lunch, it looks like iTunes and their ilk will be taking their breakfast too.