BPI and BRIT Awards CEO Geoff Taylor put exports on the top of the agenda at this year’s AGM for the trade body. It’s become a key area of growth for the UK business in the streaming era - but what impact will Brexit have?
Following the latest announcement on export figures for 2017, which showed revenues passing £400 million, Taylor turned to the thorny subject of Britain’s withdrawal from the EU. Taylor noted that there are 204 days until Brexit is set to happen, though there is still an awful lot of “uncertainty”.
“Over the next few years, our Government is going to be seeking to negotiate trade deals with countries around the world and this represents a potential opportunity to raise the profile of the UK in emerging markets and increase our share in developed markets, both of which will have the potential for growth, particularly in streaming services,” said Taylor. “At the moment, though, we are in a period of uncertainty.”
For UK labels, he said a hard Brexit could cause a range of problems: customs hold-ups, additional costs and delays in importing physical products, visa concerns for staff and artists, and new bureaucracy that makes it harder and more expensive for UK artists to tour in the EU.
“The BPI has been continually in touch with Government about all of these concerns on your behalf, but with so much political uncertainty it remains difficult to predict the likely impacts on our business,” he said. “We should put these concerns into context however: we have every reason to remain confident about our future as an exporter.
“We export successfully to many countries with which we do not have a trade deal, and as our business transitions increasingly to streaming some of the customs issues that Brexit might pose become irrelevant. And although Europe’s share of our overseas income has been growing slightly, around 60% of our overseas income comes from outside the EU.”
We have every reason to remain confident about our future as an exporter
Revealing a raft of detail on export income, Taylor said key export markets are the US, Germany, France, Australia, Japan, Netherlands, Canada, Italy, Sweden, Spain, Norway and Brazil. The Top 10 markets for the UK account for around 80% of overseas revenues.
However, Asian markets which are in the global IFPI Top 10 - Japan, South Korea and China - are not as prominent in terms of UK income. It could present a big opportunity in a post-Brexit trading world.
Despite the uncertainty over Brexit, trade with Europe remains strong both inside and outside the EU. Over the last three years, overseas revenues from Europe have increased by 29%, with strong growth in Turkey (60%), Russia (84%), Hungary (62%), Greece (72%), France (57%), Denmark (52%), Netherlands (43%).
“Europe should remain a key priority for us after Brexit,” stressedTaylor.
Revenues back to the UK from Asia are also growing at twice the rate of those markets. There have been big increases in China (432%), India (119%), Singapore (100%), Korea (93%), Philippines (79%), though there has been static growth in the dominant Asian market of Japan.
Perhaps a worrying sign for the UK biz is that export growth from the US is not keeping pace with the growth in the US domestic market. In the past three years, revenues have increased by 35% in Canada compared to 16% in the US.
“As our largest export market, maintaining our market share in the US is going to be vital to our export success,” said Taylor.
But it was a rare under-performance for the UK biz internationally. In 34 out of 43 countries tracked, overseas revenues from British music have outperformed the market over the last 3 years.
Taylor highlighted the BPI’s work with the Department for International Trade on the Music Export Growth Scheme and trade missions. Phil Patterson, music specialist at DIT, appeared on a panel at the AGM and confirmed the scheme would continue to run until at least 2020.
“The DIT are very happy with the way it’s gone,” he said, as he highlighted the 11 to one return for every pound invested.
However, the representatives from government were less forthcoming about dealing with Brexit.
“We all take your concerns very seriously,” said Neil Semple, head of creative content at the DIT. He added that preparations had begun on international trade deals outside the EU.
The AGM also highlighted the success of Horus Music, which has been awarded the Queen’s Award For Enterprise following its move into India. Of the company’s sales, 97% are from overseas.
Ahead of the vote on the EU Copyright Directive vote on September 12, Taylor also took the opportunity to urge the industry to back UK Music’s campaign. He drew attention to the global market penetration for YouTube among young music fans, which represents a loss in revenue based on the familiar ‘value gap’ arguments.
“It’s a major music service and it needs to be licensed fairly on a comparable basis to other services,” said Taylor.