Analysing the landscape for neighbouring rights with Peter Leathem

PPL CEO Peter Leathem discusses PPL’s place in the neighbouring rights market, and shares his thoughts on the current landscape for international collections.

On 25 June, PPL contributed to a special issue of Music Week dedicated to the neighbouring rights sector. This special issue looked at some of the key developments in the marketplace.

Our Chief Executive Officer, Peter Leathem, shares his thoughts on the importance of international collections, as well as how PPL works to continue achieving success in this area.

From a PPL standpoint, what state is the neighbouring rights sector in 2018?

“Global revenues from recorded music used in broadcast and public performance – also known as neighbouring rights – continue to rise both in the UK and internationally and continue to be a very important component of an evolving revenue mix for the music industry.  This is naturally very encouraging news for our members.

The UK market plays an important role in this growth. The health of the sector can be seen in PPL’s continued positive revenue growth for 2017 across each of the three main revenue streams: broadcast, public performance and dubbing, and international. In fact, in the last five years, PPL has generated almost £1 billion in revenues for record companies and performers.

Since launching in 2006, PPL’s international operations have continued to go from strength to strength. We recognised the importance of this sector to performers and record companies early.

By the end of 2006, we had collected £6 million. Fast forward ten years and, in March 2018, we announced our largest annual international collection of £49.6 million and, as a result of recently signing further agreements with collective management organisations (CMOs) in Romania and Georgia, our total number of international agreements has reached 90. 

During this period (2006 – 2017) we have collected over £355 million internationally for performers and record companies – our work generating this income has raised awareness of the existence and importance of neighbouring rights and we believe it has helped to create a more competitive market.

The growth we are experiencing in the UK is in part due to PPL’s continuously expanding network of agreements. Last year, we received first time payments for our members from Romania and this year we have already seen a first time payment from South Africa and Lithuania. We collaborate with CMOs and trade bodies around the world to ensure best practice is shared when it comes to the collection and distribution of revenue to drive maximum returns. Through our direct relationships with CMOs, we play a role ensuring they recognise the value of the rights we represent and provide just returns for the use of recorded music overseas. 

Neighbouring rights is our core business. It’s what we do.”

What are the key changes and developments in PPL’s neighbouring rights strategies over the past 12 months?  Please give examples.

“PPL has a strong and steadfast business model that forms the foundation for our future progress, and positions us well to deal with today’s ever-changing, competitive and complex market.  We are a place where people’s passion and knowledge come together with innovation and ideas and we are a company that is very driven by data.  Our focus is many-fold, but three highlights from the last 12 months are investment in technology, a brand new licensing operation and collaboration with CMOs. 

  • Investment in technology: In-house at PPL, we have been developing and investing in our own insight and analytics tools to make our operations even more efficient and to help us maximise revenues from the data we hold on more than 12 million recordings. 
    >Another application of innovative technology is our Music Recognition Technology (MRT) pilot with PRS for Music, which continues to see devices being installed into licensed bars and clubs across the UK to understand how this technology can help to identify music being played in public.
  • Brand new licensing operation: The launch of PPL PRS Ltd – which took place earlier this year - is one of the biggest changes in the history of PPL and represents a bold change to our strategy for collecting revenues in the UK for our performer and record company members.
  • Collaboration with CMOs: Collaboration is key to our interactions with others. We work with many different parties – our members, their representatives, industry bodies and many others.

    Our achievements relate, in part, to our longstanding relationships with overseas CMOs and our presence on international forums that exist to share best practice and raise the standard of data being exchanged between CMOs around the world.

We work particularly closely with SCAPR (Societies’ Council for the Collective Management of Performers’ Rights) and DDEX (the Digital Data Exchange).  Recently, I was elected to the board of SCAPR to support the drive by the organisation to improve efficiency and maximise revenues for performer members through various initiatives.

We are also on the board of DDEX. This is a consortium of organisations across the music industry with a mission to standardise the data supply chain, for the most efficient and effective processing and exchange of revenues.

Our international collaboration does not focus solely on collecting revenues or taking part in initiatives to develop data or IT in this area. We also provide services to support a range of other CMOs around the world with some aspects of their own activities. At PPL, we have built sophisticated technology, in-depth neighbouring rights knowledge, and extensive data expertise to manage our own operations. We are happy to share this experience and best practice with others around the world.

The more we can work with others to raise data standards and improve the quality of information that flows between CMOs, the better the output will be for our members and other CMO’s members, in terms of what they get paid when their music is played around the world.”

What have been the major changes across the sector as a whole?

“In recent years, growth of the neighbouring rights sector – both in terms of the organisations collecting internationally for performers and rightsholders and in revenue – has been a defining factor in its evolution. In particular, the emergence of rights in the US and increasing value of these rights has been a game changer for many in the business. In the backdrop of this ever-evolving sector, the UK is at the forefront of the collective management of sound recordings and is a leader in driving forward innovation and collaboration between CMOs.”

Does neighbouring rights get the recognition it deserves in the music industry? Outline its importance, with case studies/evidence where possible.

“PPL is a business of scale and complexity and it has the resources and the commitment from dedicated and driven employees to deliver.  Our relentless focus on our members’ needs help us to determine and achieve our goals for long-term success.  Everyone benefits from that success and our growing membership is testament to the fact that this work is appreciated and respected.  

There is no doubt that the work that we do has a sizable impact. The revenue we distribute can make the difference between profit and loss, a hobby or a career, one’s success or otherwise. In 2017, PPL collected a record £218.8 million and paid more than 98,000 performer and record companies at least once.”   

Revenues are growing consistently, but what more is there for the business to learn from and about neighbouring rights? What can be done to push the sector forward?

“At PPL we have a global picture of the neighbouring rights market. We set ourselves extremely high standards and our desire to improve the quality of data being shared within this market has enabled us to drive data quality standards forward with our counterparts around the world.  

The importance of complete and accurate data cannot be underestimated. Supplying up-to-date repertoire information and performer line-up data is crucial.  As performers and record companies have increased the quality of the data they supply to PPL, more money is collected and distributed to our members.

We have data relating to over 12 million sound recordings in PPL’s repertoire database and manage data relating to approximately 31,500 new recordings per week. Our sustained investment in technology and data management is improving efficiency and data exchanges with other CMOs, and will continue to do so.”

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