MBW Views is a series of exclusive columns written by notable music industry figures…who have something to say. here, Andrea Czapary Martin, CEO of PRS for Music, looks to the future of CMOs, arguing that collaboration and partnership are the only options, and that in an increasingly connected and rapidly evolving world, silos and the status quo are simply not viable…
Any organization celebrating its 110th anniversary (as PRS for Music is currently doing) inevitably takes some time to consider its development since its inception.
But as we celebrate, we’re also focusing on the future – not just of PRS for Music, but of collective management organizations (CMOs) and the entire music ecosystem.
The industry has changed dramatically over the past few years, becoming increasingly global and more competitive than ever. BMI, one of the world’s largest societies, has changed hands following a successful acquisition by New Mountain Capital, while Global Music Rights (GMR) has a new private equity partner, Hellman & Friedman.
In the past few months, ASCAP and SACEM announced a new strategic alliance that will, among other things, “leverage investments in state-of-the-art data infrastructure.”
All of this points to dramatic changes in the social ecosystem as the industry becomes more competitive and commercially aware. And, while the fundamental principles behind the founding of the PRS 110 years ago remain as strong as ever, no one is immune to the effects of these changes.
However, there are two ways to achieve change: either you lead the change, or you make it happen. We intend to lead by leveraging all the assets we have and the tremendous value we have created over the past five years.
We start this new journey with the strongest attitude. The past five years have been five years of excellence in the fundamentals. Build a high performing team, strong systems, reliable processes, good governance to introduce better and wider licensing locally and internationally. We increased revenue, reduced costs, and created value for the company.
Over the past decade, the aspiration of many societies has been to achieve a cost-to-income ratio of 10%. In 2023, our cost-to-income ratio fell to a historic low of 9.2%. But while this is something we’re proud of, we have bigger ambitions. We will continue to challenge ourselves to increase income and reduce costs, and answer the question: Can we become the first society with a cost-to-income ratio of 5%?
Some may say it’s impossible, but that’s what they said when I announced that PRS for Music was going to be a billion pound society. In 2023, our revenue will be £1.08 billion.
However, achieving this requires reimagining the social network, clearly identifying what we need to preserve in the future and, just as importantly, what must change in the future – decision-making driven by the interests of all our members that we are privileged to represent.
There is always a need for local communities; they have a unique understanding of the different cultural needs of their members. While we acknowledge that the localization of social networks will inevitably lead to duplication of effort and cost, for the foreseeable future they will increasingly be best placed to build the strongest relationships with local customers.
All societies invest in their own systems and processes, often seeking to solve common problems and achieve similar goals. Furthermore, due to digitization, the demand for global solutions and licensing is increasing.
As a result, there are significant inefficiencies that ultimately reduce the amount of money that can be paid to songwriters, composers, and publishers.
Look at the booming audiovisual industry. Services such as Netflix, Amazon Prime and Disney+ are global services powered by major UK and US productions and now reach hundreds of millions of customers around the world, regardless of national borders.
However, each society continues to match the use of music by these services within its own domain, meaning the same cue sheets and composer messages are being processed hundreds of different times. As these services continue to grow, some societies’ processing systems are struggling to keep up, meaning royalties are processed and paid out more slowly.
The solutions do not maintain the status quo and there is no value in society investing again in a separate investment in upgrading existing audiovisual processing and pairings.
This is one of many examples where the community of music creators can be better served through increased collaboration and integration of services and licensing.
PRS has a strong track record of forming partnerships with other associations, leading the way in bringing technology, processes and people together in the most effective way. Our alliance with GEMA and STIM established ICE, the first and most advanced multi-regional licensing centre, which has paid more than €4.5 billion in royalties to rights holders over 14 years. The efficiencies provided by ICE were critical to our ability to reduce multi-region online management fees by 20% this year.
Our pioneering public performance licensing joint venture with PPL (PPLPRS Ltd) simplifies the licensing process for over 400,000 customers and significantly reduces the duplication of costs between PPL and PRS for separate licenses for the same customer.
“There are two ways to achieve change: you either lead the change or you make the change happen. We intend to lead.
Many larger associations are already embracing partnership opportunities, but this will increasingly become inevitable for all collections associations.
But we do have to act, and the world doesn’t stand still while industries struggle with protectionism or pride. For example, artificial intelligence (AI) will fundamentally reshape our industry, not only in how society operates, but also in how its members create music.
If we are to meet the challenges and make the most of the opportunities, we need to act quickly. i used to work Reader’s DigestOnce the Amazon of the offline world, selling everything from books to movies to music to insurance. It collapsed because the organization didn’t change quickly enough and make hard decisions.
This is one of the reasons we are already working on new projects and potential partnerships. Competition will be fiercer, but we can also do more together.
Of course, one principle must remain unchanged: ensuring that we protect and develop the rights entrusted to us.
Members want greater transparency and deeper insights from the vast amounts of data we are processing. They want to get their money faster, take fewer deductions along the way, and have more control over when royalties arrive. They don’t want to pay for multiple systems in different places to do the same job.
But if we do the right thing for composers and writers and provide them with more money, greater transparency, accuracy, and speed, ultimately, everyone will benefit.
This will secure the future of the CMO and ensure that PRS for Music continues to exist for 110 years and beyond.
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