Good morning. As you have been hearing today 2014 was another good year for PPL. Furthermore as Chris showed on one of his slides this was not an isolated occurrence but rather part of a sequence of strong performances that actually date all the way back to when Fran Nevrkla took over as Chairman and CEO of PPL fifteen years ago.
As we look back on another successful year, I would again like to take this opportunity to thank Fran. As he has already mentioned 2015 is going to be his final year as PPL Chairman, thereby bringing to an end a tenure which started back in 2000, initially as Chairman and CEO, before standing down as CEO and remaining as Chairman only from 2012.
Fran has already set out some of the key achievements under his leadership. As someone he brought into PPL in his early years I would like to add a couple of observations of my own. Fran has presided over the most radical transformation of PPL in its 81 year history and also its most successful period as a company, overseeing 15 years of significant revenue growth. As a former professional violinist and record company executive he has worked tirelessly, and with complete determination, to do the best job possible for all of PPL’s record company and performer members. He has created the modern day PPL that my team and I will aim to continue to drive forward.
I would like to say a massive thank you to Fran from everyone at PPL for all that you have achieved and to wish you all the very best for your retirement. Could we have a round of applause for all that he has achieved on your behalf.
As well as strong leadership from Fran, one of the main reasons behind PPL’s success over the last fifteen years, as he himself has mentioned, has been the breadth of support from across the recorded music industry. As soon as he started at PPL, Fran began the process of turning what had traditionally been a record company organisation into a PPL that also welcomed the performer community into the fold. Over the years that followed, PPL rewrote its constitution, reshaped its governance and devoted itself to providing a first class service to record companies and performers alike. Today, PPL is a service company to the record companies – big and small, the contracted featured performers, the non-featured performers and the studio producers – with all of those parts of our industry represented through directors and attendees on our board. I am therefore delighted that we have been able to propose today the adding of a further performer director position on the PPL Board, as we continue the evolutionary journey that Fran started back in 2000.
Having the performer community represented in PPL’s governance and decision-making has strengthened us greatly and I think it is incredibly positive that the Board unanimously agreed to put forward the proposed board structure changes today. PPL has a unique unifying effect for the various parts of the recorded music industry when they do not always find themselves in agreement outside of the PPL environment. Indeed, we have looked beyond just the directors on the board and have sought to involve the wider recorded music industry by inviting some of the industry trade bodies to be involved with our governance as attendees. This has enabled the Board to be a place where some wider industry matters can also be constructively debated even when they do not really fall under PPL’s remit.
So as well as the PPL Board itself I would like to thank for all their help and support AIM, the BPI, the Featured Artists Coalition, the MMF and the Music Producers Guild, all of whom have had representatives involved with PPL as attendees of or directors at Board meetings. While not involved with the PPL Board I would also like to thank UK Music and in particular Andy Heath, Jo Dipple and Tom Kiehl for all of the public affairs support they provide to PPL. This is important not just because they provide a first class service but it also means that we do not need to duplicate those resources ourselves at PPL.
I am delighted that we have been able to present to you today some of the further progress that PPL has made in 2014. While there is always more to do I firmly believe the results for 2014 show that we continue to head in the right direction. One of the key headlines as you have seen is that we not only collected more revenue but also paid out more of that revenue faster, with more detailed statements in support of those payments, to more members than ever before. I am particularly proud that over 55,000 performers received at least one payment from PPL during 2014. Collective management is important to licensees and members alike but it is really important to small business whether that is being able to play any recording that they wish to play as a licensee without having to find every record company or performer, or being one of those 55,000 performers receiving a payment for the use of their recorded performance by businesses around the UK and internationally. The vast majority of our licensees and our members are small businesses, which form a critical part of the UK economy.
2014 was not just a year of further revenue growth, but also a year when we continued the strategic growth and development of the services PPL is in a unique position to be able to offer. As Christine has just explained customer service remains, and will always remain, a key priority for us at PPL. The success we have had as finalists in a whole range of independent awards over the last couple of years is a real credit to the team at PPL and a demonstration of the progress that we have made when we can compare ourselves to some of the best companies in the country. Rather than make us complacent this progress has made us more determined to do even better moving forward.
The good progress we have been making in terms of the service we deliver was also recognised in the context of the regulatory environment for collective management organisations (or “CMOs”) like PPL. In 2014, PPL was one of a number of CMOs that participated in the UK’s first Independent Code Review process. That review process was part of the system of self-regulation (together with codes of conduct, and access to Ombudsman Services for customer complaints) operated by PPL and various other UK CMOs since 2012. The Independent Code Review report, published in June 2014, contained many positive findings. It found that PPL and the other CMOs were compliant with their codes of conduct and had demonstrated a collective commitment to make self-regulation work. It also found that complaints about CMOs had decreased significantly, to a low level that was not a concern. In addition, PPL and PRS for Music were commended for their joint working efforts and, following recommendations from the Review, set up two joint panels with PRS for Music – one for small business music users (represented by trade bodies) and one for TV broadcasters – to meet twice a year to provide updates and share feedback.
As David mentioned earlier, the next key development for CMO regulation in the UK is the implementation of the Collective Rights Management (“CRM”) Directive into UK law next year. PPL has worked well under self-regulation and I am sure that the same will be true for the changes that will come in under the CRM Directive next year.
So driving revenue growth and continued service improvements remain fundamentally important to PPL. We will continue to make progress in these areas. In addition, the progress that we have already made in recent years is such that we can now really focus on continuing to develop our working relationships with other CMOs, both in the UK and on the international stage. This will be a key strategic direction for us over the next 5 years as we look to build on what we have achieved at PPL and see how working with those other organisations can drive further efficiencies in our operations and deliver ever greater services to you, our members.
In the UK, our relationship with PRS for Music continues to strengthen. In recent years we have focused on dramatically growing public performance licensing revenue, and following growth of 53% in the last 5 years it is now PPL’s largest revenue stream. While we are confident that we can continue to grow public performance revenue on our own, by continuing to grow the number of businesses that we licence and by reviewing some of our tariffs, we strongly believe there are very good reasons for PPL and PRS for Music to do more public performance licensing together. So we have been working on a range of joint activities, as you have just heard from Christine. We have ambitious plans to build on our existing joint working relationship in the area of Public Performance licensing and this will be a topic upon which you will be hearing much more in the near future.
Indeed, we will also look to expand this joint work with PRS for Music to other areas of our operations. We conduct many similar activities, albeit for different rightsholders, where there are plenty of opportunities for further synergies and efficiencies. I have a very good working relationship with Robert Ashcroft, the CEO at PRS for Music, and working even more closely with PRS is going to be one of our top priorities moving forward.
On the International front we have also been working closely with dozens of overseas CMOs in what is a crucial part of PPL’s business. Public performance, broadcast and other related revenue collections for sound recordings, sometimes called “neighbouring rights” or “performance rights”, continue to grow around the world. You have an increasing number of countries introducing the relevant rights, such as Indonesia and Singapore in the Far East. There is then an increasing focus on this revenue in those countries that have rights, leading to increased collections. In 2014 1.9 billion euros was collected around the world for record companies and performers by CMOs like PPL working on their behalf.
So this is an area of the business that requires everyone’s attention. This is particularly so for the British music industry as the recorded music that it produces is popular throughout the world. That popularity then needs to be converted into relevant payments, and that is the area of collaboration upon which we are focusing.
While PPL has already become the market leader for International collections for record companies and performers, by quite some distance, we believe that we can improve our services even more if we and other CMOs can jointly improve the efficiency and accuracy of the International collection and distribution processes.
One aspect of this international collaboration, as Chris touched on, has seen PPL provide back office services to CMOs for the first time in 2014, which draws upon our significant and successful investment over recent years in IT systems and sound recording data quality. There is an option for CMOs to use PPL’s technology and data to support their own back office operations as opposed to trying to develop their own solutions. Managing sound recording data and the related IT technology is not easy and is an area where it makes absolute sense to collaborate and for CMOs to move away from all building their own solutions at varying costs and with varying degrees of success and sophistication. We will be very happy to expand these initial service offerings if there is further demand moving forward. I know that many of the member companies are keen to see more shared and consolidated solutions and are very supportive of the progress that is now being made.
In addition PPL has also been working with a large group of in excess of 30 CMOs representing performers on developing new IT systems and ways of working that will enable those CMOs to make very positive steps forward together in the near future. I have to say that this would not have been possible even relatively recently but I am delighted with the level of co-operation and progress that is now being made by so many different CMOs.
These developments are needed as at the moment international collections are more difficult than they should be due to the different IT solutions and databases that reside at each different CMO. Making those databases talk to each other is not as easy as it should be. Currently there is not enough sharing of data and IT systems and this programme of work with 30 performer CMOs under SCAPR (the international trade body for performer CMOs) is the most significant step forward to date and PPL is a key party in the developments. The project called VRDB2, which stands for Virtual Recording Database, is seeking to deal with the current disparate solutions at each CMO by developing a more shared approach to some of the core work involved in International collections without seeking to be too ambitious in what it is seeking to achieve in the current programme of work. This has been and will continue to be a key project for PPL moving forward.
These are exciting times for International collections and CMO collaborations which is very good news for you the members, given the importance of growing International collections and the success of UK music internationally.
So in summary we remain focused on developing further both our financial performance and the services that we offer, as well as continuing to develop our key CMO partnerships both in the UK and around the world. We take very seriously the increasingly important role that PPL performs for ALL its members, against a backdrop where PPL’s revenues are growing as certain other music industry revenues are changing and in some cases declining.
In conclusion, as well as the PPL Board I would also like to thank the Performer Board and our various committees for their continued insight, support and governance. Above all, I would like to thank all of the PPL staff for their unstinting help, dedication and support in delivering so successfully against an ambitious company agenda and for enabling us to present today such a good set of PPL results for 2014.
Thank you for listening.