Tunes of change

Society has too much to lose if we don't ensure that talent is rewarded, writes BPI's chief executiv

There is no doubt that the recording industry is going through a period of unprecedented change. The very foundation upon which our business is built - the ability to generate income from the artists of today to invest in the artists of tomorrow - is being threatened by widespread copyright theft.

Operations such as that against the illegal OiNK service represent just one part of how our industry is successfully managing the challenges of the digital age. There is no magic bullet to eradicate copyright theft and no single anti-piracy action or business model will change the world. Even so, our mission is to turn more of the growing number of streams, copies and downloads into pounds and pence to share across the value chain.

Some have suggested that a larger issue for industry is the ability of artists such as Radiohead to seek alternative distribution channels. But there is in fact nothing new in established artists setting up their own record label - Prince, Simply Red, Oasis, The Beatles, and Led Zeppelin have done the same thing in the past.

But what the new distribution models recently adopted by the Charlatans, Madonna, Prince and others have in common is that they generate revenue streams that are far less vulnerable to copyright theft: with recordings being used to drive the sales of concert tickets in the case of Madonna, or as a promotional vehicle to claim a share of newspaper income in the case of Prince. And models such as these are only practical for well-known artists who have built up large fanbases after years of marketing and investment by record labels.

The bottom line is that no-one is offering an alternative to the core business model of a record label - investing in unknown artists on the basis that they will generate income in the future. To cover their investments in new music, record labels are seeking to earn income from a wider range of artists' revenue streams.

Lines are blurring between the traditional record label and other music companies. While opportunities arise for others to enter the record business, record labels are developing broader business models to generate income from revenue streams outside recorded music.

The many services that a record label offers to an artist have become more important as media channels proliferate. In addition to their traditional expertise in international physical distribution and marketing, labels have networks of relationships to collect licensing income globally to remunerate artists, music publishers and other rightsholders.

The back catalogues and broad portfolios of larger record companies give them negotiating power in striking deals that can benefit all the artists on their roster, while digital channels are opening up many new opportunities arise to promote acts across a multiplicity of online channels and exploit catalogue more effectively than has been possible through physical retail.

Labels are also well-placed to generate new income from brand partnerships and synchronisation. These capabilities are essential for artists trying to build a long-term career.

The BPI is at the forefront of the industry’s efforts to ensure that there is a fair financial return for artists and those who invest in creating new music. We believe the prevalent culture of online copyright theft will be curbed through a combination of consumer education, new business models, more robust action by ISPs against online copyright theft and stricter enforcement by industry and government.

We believe that the internet will become an environment in which creativity can be effectively monetised, as our society, economy and culture has too much to lose if we do not ensure that creators are rewarded.

We do not need to convince anyone of the emotional value of the music they love, but if the record industry is to reach its potential online, we must succeed in our mission to convince new industry partners, policy makers and consumers that an online and mobile ecosystem in which music is respected and valued is in the interest of everyone.