After a decade in charge at PRS For Music, Robert Ashcroft is handing over the reins of power to Andrea Martin next month.
The organisation’s Board noted the 70% revenue growth during his spell in charge at the top, while Ashcroft led from the front during the campaign for the Copyright Directive. But there were also serious issues with overpayments under his watch.
In a valedictory interview with Music Week, the outgoing CEO has opened up about the challenges for the industry in the streaming era.
The latest results for the collection society showed continuing strong growth for online revenues. Streaming royalties increased by 22.4% year-on-year to £126.9m, powered by Spotify and other DSPs.
“Apple Music has been very good, we have been very encouraged to see YouTube launch their subscription service and we’re watching that with an eagle eye,” Ashcroft told Music Week. “There’s no doubt that the subscription model works for people.”
Last year Facebook was licensed by PRS for the first time, which is set to swell collections further.
“They’ve got a licence and that’s very good, they’re working very hard to make sure that the have the right content management systems in place,” said Ashcroft. “The thing that I’ve noticed the most is the progress they have made with Instagram. You’ve got a lot of music in the catalogue that you can add to your videos or albums and they’ve also classified it by mood. Facebook are making it easy [for users]. They are working on how music fits into their particular customer base and social media platforms. I look forward to seeing the results.”
Revenue from video-on-demand was actually down 13% year-on-year at £12m, as a result of a large settlement in 2017. PRS said underlying growth was around 20%.
The big challenge that we face with Netflix is importing the American practice of buyouts
“We get good rates out of [Netflix] and the business is growing well,” said Ashcroft. “The big challenge that we face with that whole area is importing the American practice of buyouts. They particularly want to buy mechanicals to make sure they’re not exposed in the US market to class action lawsuits. There is a lot of concern about how to make sure you’re properly licensed in the US and the fact that there’s considered to be no mechanical rights in a stream. It’s such a big market and it’s their [Netflix’s] home market, so that weighs very heavily on them.
“My experience is that they are quite happy to work with a collective, if it’s easy to do so. One of the benefits is they don’t have to worry if a show is going to be a hit or not – they pay according to usage. That is still evolving and we are working to make sure that licensing is easy for them and productive for us. It’s definitely an important area to watch.”
Ashcroft’s successor will also be monitoring what he sees as “challenges in US market”, in particular the challenge by Spotify and other DSPs to the streaming royalty rate set by the CRB.
“If they [the CRB] get it up to the 15% that they provided for then the US begins to come in line with the other parts of the world,” Ashcroft told Music Week. “It is generally speaking a low copyright zone and this would move it in line with other areas.”
As for the Mechanical Licensing Collective, which has been established as part of the Music Modernisation Act, the PRS CEO said its impact remains to be seen.
“That could either be a very big thing and improve licensing in the US, or it could end up running into all kinds of difficulties and just become a legal device to avoid class action lawsuits,” he suggested.
While recent growth has been driven by subscriptions, Ashcroft was optimistic about the launch of new ad-funded services for speakers by YouTube Music and Amazon Music. At the Music Week Awards, Amazon Music and Alexa won for Music Consumer Innovation.
“The free element is more limited than the subscription element and they’re taking a leaf out of Spotify’s book, because Spotify have definitely proven that there is a funnel there,” he said. “What I would hope is that the home speaker really proves a catalyst for driving subscription of both Amazon and YouTube’s services. They’re definitely restricting the functionality of the free layer, because they very much have the idea they want people to upgrade.
“The challenge with YouTube music available on your computer and on your smartphone is that people are so used to accessing it for free that they can’t see the value proposition of upgrading to a subscription. Whereas if they begin to access music through the Google Home device or the Amazon Echo and then they find it frustrating because they can’t actually get what they want, then they might well upgrade. I might be an industry outlier, but I think it’s more positive than negative.”
To read Music Week’s analysis of the tech giants’ move to ad-funded streaming, subscribers can click here.