UK label evolution continues

Figures released today by British record companies’ body the BPI show that labels are beginning to generate significant revenues outside their traditional base of retail sales – Record company revenues outside direct sales of music increased by 13.8 per cent to £121.6 million in 2007, from £106.9m in 2006. These additional revenues now account for 11.4 per cent of record companies’ domestic income.
 Record companies generate income through sales (selling music recordings to consumers via retailers), licensing (giving permission for third parties to use recordings commercially) and multiple-rights income (revenue derived outside recording copyright).
New partnerships and business models mean record labels’ income through licensing is increasing. Labels are also generating income outside the direct sales of music and licensing by extending their relationships with artists to include a broader range of artist services.
 Digital sales are going from strength to strength, with digital formats now accounting for around 85 per cent of all Top-20 singles sales. More than 200 million downloads have now been sold in the UK since the launch of the first mainstream stores in early 2004. In total, digital formats now account for 8.6 per cent of all UK record company sales income.
Digital licensing income is increasing too. On-demand streaming services, both online and on mobile platforms, including advertising-supported services such as We7 and Yahoo Music saw income from new digital business models grow by 55.7 per cent.
Synchronisation licence income, from the use of music in advertisements, films and games continued to grow strongly in 2007, where revenues grew by 20.1 per cent. There was also a 14.8 per cent increase in record label income from PPL: broadcast and public performance licensing.
360 degree deals are also having an impact. Such deals may generate income from merchandise, touring, the use of artist logos, digital products such as mobile phone wallpaper, and sponsorship deals. Revenues generated by record companies in this area increased by 16.2 per cent in 2007.
 BPI Chief Executive Geoff Taylor said: “Today’s record business is unrecognisable to that of five years ago. Labels have rapidly evolved into digitally literate businesses that generate significant revenues through licensing.”

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