“The graph the record industry doesn’t want you to see”

Paul McCartney in London

The most intriguing illustration I’ve yet seen on the relationship between record label and artist revenues comes courtesy of London’s Times Labs Blog. It is, The Times says, “the graph the record industry doesn’t want you to see,” and it is a doozy.

The post contains a graph with data compiled by the BPI (British Phonographic Industry) and a PRS for Music report, and outlines UK music industry revenues from 2004 through 2008. It tracks five metrics: recorded revenue to labels, recorded revenue to artists, live revenue to artists, live revenue to promoters, and PRS revenue (money that comes from the performance of music online, via broadcast, and public shows, as well as mechanical and international rights).

The most striking revelation of the graph is that, sometime in 2010, live revenues payable to artists will for the first time overtake record label revenues and record sales. It’s the first factual evidence (I’ve seen, at least) that falling record sales are not necessarily hurting musical artists.

The Times‘ data further points out that live music is far and away the most lucrative segment of the music industry for artists, mainly because artists get to retain a high percentage of ticket sales. The findings also suggest that illegal filesharing is, in fact, not really hurting artists as much as we might think — just the labels. That could explain why, at least in the UK, labels have pushed so hard for anti-piracy legislation.

There are, of course, caveats to The Times‘ findings. Chris Cooke, business editor of theCMUwebsite.com, offers two critical qualifications to BPI/PRS for Music figures:

• Record labels take a much larger chunk of record sales than promoters take from live performances because the labels traditionally have made an investment in new musical talent; and
• The live music industry may be thriving, but grassroots artists still barely cover their costs by playing live. The real money in gigging is being made by the Madonnas and McCartneys of the world.

Cooke goes on to say that labels could have buoyed their infrastructure a decade ago by diversifying their operations rather than relying on digital rights management and litigation to stem falling record sales. And, if current trends continue, music investors will begin to secure their investments on the live sector, and that could mean a declining artist percentage of gig revenues.

The data points to many different facets of the music industry and certainly is subject to interpretation. Be that as it may, the BPI/PRS for Music data offers a startling glimpse of what could be an entirely different kind of music industry a few years from now.

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Photo by Richard Gunn, used under a Creative Commons license.