MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. Here, Andrea Czapary Martin, CEO, PRS for Music, looks at the future for CMOs and sees collaboration and partnerships as the only option, with silos and the status quo simply unviable in an increasingly connected and rapidly evolving world…
Any organisation that gets to celebrate 110 years in business – as PRS for Music is currently doing – inevitably spends some time considering the growth from its inception.
But, amidst the celebrations, we are also focusing on the future – and not just of PRS for Music, but of collective management organisations (CMOs) and the music ecosystem in general.
The last couple of years have seen sweeping changes in a sector that’s both increasingly globalised and more competitive than ever. BMI, one of the biggest societies in the world, has changed hands following the successful acquisition by New Mountain Capital, while Global Music Rights (GMR) has a new private equity partner, Hellman & Friedman.
In the last few months, ASCAP and SACEM have announced a new strategic alliance that will see them, amongst other things, ‘leverage their investments in state-of-the-art data infrastructure’.
All of these things indicate a seismic shift in the society ecosystem, as the sector becomes more competitive and commercially minded. And, while the founding principles behind PRS’s formation 110 years ago remain as solid as ever, no one will be immune from those changes.
There are, however, two ways of approaching change; either you lead the transformation, or you let it happen. We intend to lead from the front by leveraging all the assets we have and the great value we created in the last five years.
We start this new journey in the strongest of positions. The last five years have been all about being brilliant at the basics; installing a high-performing team, robust systems, solid processes, good governance, introducing better and more extensive licences, both locally and internationally. We have grown the topline, reduced our costs and created value in the company.
Over the last decade, the aspiration for many societies has been to deliver a cost-to-income ratio of 10%. In 2023, our cost-to-income ratio fell to a historical low of 9.2%. But, while this is something we are proud of, we have far loftier ambitions. We will constantly challenge ourselves to drive up revenues and reduce our costs, to answer the question whether we can become the first 5% cost-to-income society?
Some people might say that’s impossible, but that’s what they said when I declared PRS for Music would become a billion-pound society. In 2023, we collected £1.08 billion in revenues.
To get there, however, will take a re-imagining of the society network, a clear determination of what we need to preserve into our future and, as importantly, what must change in the future – decisions driven by interests of the members we all have the privilege to represent.
There is always going to be a demand for local societies; they provide a unique understanding of the differing cultural needs of their members. Although we acknowledge the localisation of the society network inevitably results in duplication of effort and costs, increasingly, they will, for the foreseeable future, be best-placed to build the strongest relationships with local customers.
All societies are investing in their own systems and processes, too often seeking to solve common issues and achieve similar goals. Additionally, the demand for global solutions and licensing are increasing due to digitalisation.
As a result, there are significant inefficiencies, which is ultimately reducing the amount of money that can be paid to songwriters, composers and publishers.
Look at the burgeoning audio-visual sector. The likes of Netflix, Amazon Prime and Disney+ are global services, powered by big Anglo-American productions, and are now reaching hundreds of millions of customers around the world, uninhibited by borders.
Yet each individual society continues to match the use of music by these services in their own territory, meaning the same cue sheets and composer information is being processed hundreds of different times. As these services continue to grow, some society’s processing systems are struggling to keep up, meaning royalties are slower to process and pay.
The solution can’t be the status quo, there is no value in societies again separately investing in upgrading existing processing and matching for audio visual.
This is one example, amongst many, where the music creator community would be better served through greater partnership and consolidation of services and licensing.
PRS has a track record of building partnership with other societies, leading the way in bringing together technologies, processes and people in the most efficient way. Our alliance with GEMA and STIM built ICE, the first and most advanced multi-territory licensing hub which has paid out more than €4.5 billion in royalties to rights-holders in 14 years. The efficiencies which ICE provide were pivotal to our ability to reduce our administration fee for multi-territory online by 20% this year.
Our groundbreaking public performance licensing joint venture with PPL (PPLPRS Ltd) has simplified the licensing process for over 400,000 customers and reduced significantly the duplication of costs between PPL and PRS in licensing the same customers individually.
“There are two ways of approaching change: either you lead the transformation or you let it happen. We intend to lead.”
Many of the larger societies are already embracing partnership opportunities, but it is increasingly going to become an inevitability for all collection societies.
But we really have to get moving, the world is not going to stand still while the industry struggles with protectionism or pride. Artificial Intelligence (AI), for example, is going to fundamentally reshape our industry, in terms of how societies operate, certainly, but also in the way members create music.
Swift action is required if we’re to meet the challenges and make the most of the opportunities. I used to work at Reader’s Digest, which was once the Amazon of the offline world, selling everything from books, videos and music through to insurance. It fell apart because the organisation did not change quickly enough and take difficult decisions.
This is one reason why we’re already working on new projects and on potential partnerships. There will be more competition, but we can also do much more together.
There is, of course, one rail that has to stay in place: making sure that we protect and grow the rights that are entrusted to us.
Members want greater transparency and greater insights from the huge volume of data we’re processing. They want their money more quickly, with fewer deductions along the way and more control over when their royalties arrive. And they don’t want to pay for multiple systems in different places to do the same job.
But, if we do what’s right for the composers and writers and deliver them more money, greater transparency, accuracy and speed, ultimately, everyone will benefit.
That will secure the future of CMOs in general and ensure PRS for Music is here for another 110 years and beyond.
Music Business Worldwide