Geoff Taylor, BPI Chief Executive
Speech to BPI AGM, 9th July 2008
Introduction
Ladies and Gentlemen, members, friends; thank you very much indeed for joining us at our Annual General Meeting today.
Over the last year we’ve been doing some work with the Premier League, and it has made me think about the strong parallels there are between the worlds of sport and music.
As we reflect on market figures boosted by Coldplay’s Viva La Vida and Duffy’s Rockferry, it’s tempting to agree with the England football captain Bryan Robson, who said “if only we played like that every week, we wouldn’t be so inconsistent”.
Indeed, as an entertainment business, we compete with sport and other leisure industries for people’s interest and time. And we’re very successful at it - the brazen attempts by Max Mosley to attract media attention to Formula 1, suggest to me that the competition are getting desperate.
But the world of sport has so far succeeded in monetising the massive interest of the public more effectively than the world of music.
At last year’s AGM, I spoke about the need to better communicate the value of music to digital consumers, and for Government and ISPs to play a more active role in helping realise that value. We also heard from the Conservative Party leader David Cameron, on the importance of businesses acting responsibly in society.
This year’s AGM combines and develops these ideas. Our theme today is “music affects”. I doubt that any of you will need convincing of the positive effects of music. We all experience the power it exerts over our emotions, our minds and our bodies when we go to a gig, dance at a club, work out at the gym, or listen to music on our GPS-enabled satnav, HD cameraphone. Or a CD for that matter.
Many people aren’t aware of some of the other positive effects of music: a US study in 2007 found a close link between participation in school music programmes and academic achievement. This year, a Finnish study has demonstrated that stroke victims who listen to music as part of their recovery programme are twice as likely to experience improvements in verbal memory.
An analysis into the hotel and bar business found that 10% of revenues can be ascribed to the provision of music. And a study by the University of Detroit has shown that in adults over 40, listening to Barry White recordings can improve sexual performance AND endurance by over 78%. Okay, I made that last one up, but we know it must be true.
Indeed, the positive role of music in bringing people together is continuing to grow in importance – social networks like MySpace and last.fm are using music as the social glue in creating new online communities.
So those who opine that the value of music is in decline are wrong. Further evidence for this comes from research recently conducted by our friends at British Music Rights. 73% of the students questioned at the University of Hertfordshire said that, if marooned, they would take their music collection with them, above all other possessions. And with an average collection of nearly 1800 tracks, Desert Island MP3s has a bright future.
But the same survey confirms the BPI’ s own research, that more than six out of ten students download music illegally, and that the main reason for this is simply to save money.
.... and there’s the rub. The effective price of music has got out of kilter with its value.
The main cause is clear: the availability of illegal free downloads.
The effect is inevitable: long-term, it will undermine investment in new British music.
The solution is to restore the link between value and price, by developing new ways to pay for music, by building a greater awareness of why it needs to be paid for, and by challenging an environment in which it is regarded as normal to take music for nothing.
New ways to pay for music
In the first of these tasks, creating new ways to pay for music, the progress that’s being made is encouraging.
New services like Nokia’s “Comes with Music” will offer music fans the chance to download thousands of tracks, for a price that is bundled into a handset. The BPI is encouraging internet service providers to recognise the huge opportunity that new music services could offer for them to differentiate their offerings, improve customer retention and margins.
We understand that commercial negotiations with some ISPs are now quite advanced. And as our business diversifies beyond just selling units, the BPI has become the first national record industry association to report on the revenues that labels are now earning from licensing new digital services, synchronisation, brand partnerships and multiple-rights or "360 degree deals".
Together with performance and product licensing, these now contribute £122 million to label revenues and they are growing strongly.
Promoting the success and value of British music
The second task, promoting the success and value of British music and the contribution you make to both, is one of the core missions of the BPI. We do this in a number of ways.
Most obviously, we stage the annual BRIT Awards and Classical BRITs, the flagship music awards in the UK. The television audience and media coverage of both grew substantially in 2008 and this translated into sizeable uplifts in sales.
Maggie Crowe and her events team do an outstanding job producing those shows, and of course they are looking after us beautifully today. Thanks to Maggie and all her team.
But just as significant is the work we do throughout the year to explain to politicians and journalists the positive contribution you make to Britain’s economy and culture, and how you are reinventing your businesses to succeed in the digital age.
This is a long-term campaign, but we have stepped up our activity with both media and Government and, through great work by Matt Phillips and Richard Mollet, we are beginning to see results. In the media, there is a greater level of understanding now of the issues that our industry is facing and what we are trying to do to address them.
And in Government, there is now a strong will to ensure that ISPs play their part in achieving a significant reduction in illegal filesharing. Only just over a year ago, in one of my first meetings with Government, a Minister told me: “we can’t do anything about internet piracy – you just need to change your business model”. So it was heartening to hear a minister say recently, in answer to a Parliamentary question, that the Government recognises that “it is difficult for the music industry to develop exciting and viable new business models in the face of unlawful activity”.
Comments recently made by Culture Secretary Andy Burnham also suggest our message is getting through. He said that “we will bring the same values of the real world – the values that say shoplifting of a CD is unacceptable – to the internet”.
The effectiveness of our political and media engagement depends of course on a strong bedrock of statistics and research. We cannot expect other people to understand our business if we do not understand it ourselves. The work carried out by Chris Green and Rob Crutchley in the research team is highly respected in the field, and supports all of our lobbying and media activities. In addition to the mind-bendingly comprehensive BPI Statistical Handbook, they provide monthly analyses of market developments for all member companies. And as announced this week, the BPI has just negotiated discounted access to Official Charts data for all independent member companies.
Julian Wall, our Director for Independents, who negotiated that deal and led an excellent conference this morning, helps to promote British music overseas in markets as diverse as Japan, Germany and the USA. This August, the fifth BPI annual trade mission to Japan is taking the largest number of delegates ever – more than 30 companies - to Tokyo to connect with the entertainment industry there. As well as producing direct commercial benefits, his international programme has the wider effect of building an appreciation of British musical culture in foreign markets.
We also believe that it’s essential, in promoting the value of music, to connect with young people and help extend the opportunities for them to engage with music. This picks up on David Cameron’s point last year - and an important agenda of Government - that as businesses we must recognise our social responsibilities in everything that we do.
There are a number of examples of how we do this set out in today’s AGM Brochure and if you haven’t yet had a chance to read it, I hope you’ll be able to later. As you’ll see, the BPI supports various charities, including the BRIT School, through our charitable arm, the BRIT Trust. At the BRIT School young people with a passion for music – as well as the other performing and digital arts – are given the opportunity to learn alongside like-minded young people, to be taught by experts, and to make the most of their talents. We’ll be hearing more about this from the School’s outstanding Principal, Nick Williams, a little later.
Through apprenticeship schemes operated by a number of our member companies, we also extend the ladder of opportunity into tomorrow’s music workforce. The Music for Good scheme, pioneered by SonyBMG and now being expanded with the backing of BRIT Trust funding, sees young people from local community groups being personally mentored by senior label executives and getting hands-on training in the skills required to work in music and entertainment.
And earlier this year we announced a new partnership with the Football Foundation’s KICKZ programme, which will help ensure that young people from disadvantaged communities will have regular access to music making facilities within professional football clubs. The more we can do to encourage music making, the better chance we have of young people realising that music and ideas are something to be protected.
Standing Up for Creativity
The BPI’s third role in restoring the link between the social value of music and its economic value, is to stand up for the fundamental principle that labels and the artists they work with have a right to be paid for what they do.
Our belief in the importance of this principle would mean nothing without action to back it up. As Lech Walesa said “the global supply of words is high” but in everything there is a strong demand for deeds. The BPI’s Anti-Piracy Unit and Legal team work hard on your behalf to tackle serious breaches of copyright such as CD-R piracy, illegal imports, pre-release leaks on P2P networks and illegal music download sites, blogs and hubs.
Perhaps the most high profile case in the last year saw the successful prosecution of four criminals engaged in a £5m conspiracy to import pirate CDs from the Czech Republic, for sale at market stalls and record stores across the South East. On the internet side, the BPI team also worked with IFPI, the police, Interpol and Dutch authorities to arrest the individual behind the notorious pre-release site OINK, which had over 600,000 members who between them downloaded 21 million files containing tracks or full albums.
And for Kiaron Whitehead and the legal staff, there has been a relentless focus on the issue of ISPs’ co-operation in tackling illegal uploading and downloading.
The agreement with Virgin Media announced last month represents an important milestone in developing a partnership with ISPs to tackle illegal peer-to-peer. But as we have constantly said, this is just the beginning. The education campaign with Virgin Media demonstrates that it is possible for a major ISP to take the message that copyright matters online, and communicate it to their customers in a positive way.
The next stage is to reach agreement as to how to deal with customers who are not convinced by, or don’t care about our arguments. We are closely involved in discussions with ISPs and with Government to try to push forward on this key issue.
And there should be no doubting our willingness to use our legal rights if necessary against ISPs that refuse to cooperate in dealing with the illegal filesharing on their networks. There are some who appear to delight in reaffirming their intransigence. Their position is not only socially irresponsible, it is hypocritical and it is legally unsustainable. We are determined to see it change.
Conclusion
To conclude, the effects of music are felt way beyond the studio or the stage. They are woven into our national fabric, bringing strength to our economy, colour to our society and richness to our culture. I’m proud to represent a group of businesses that are doing something positive that enhances all of our lives - there isn’t a magna carta for music, but if there were, I hope David Davis would resign to defend that too. And I am pleased to say that the people I work for recognise that they have responsibilities, not just to their shareholders and to their staff, but to their communities too.
The value of what you do, supporting artists’ careers in music, is not being eroded - it is growing. You only to have to look around at the demand for music and how important it is in people’s lives to know that this is true. You only have to meet a young artist or plugger, struggling to make their way in this business in the toughest of times, to know that what we do matters for British music.
So these factors are what drive us at the BPI every day. We care deeply about piracy, because not paying for music undermines the deal between society and its creators.
We care about helping people to play music or get into our business, because we think music is a universal good that should be open to everyone.
And we believe that our members, indies and majors, working together, can help ensure the future of British music is even brighter than its past.
We do this work not to earn brownie points - or Cameron points, for that matter; but because the future of British music is a cause we passionately believe in.
Thank you for listening.