Geoff Taylor (BPI): 'We would like to see a trade deal between the UK and the EU addressing our issues'

The UK music market had a great year in 2019, marking the fifth consecutive year of growth. With more than 114 billion music streams recorded in 2019, streaming revenue is becoming the driver of growth, according to figures from the BPI, the organisation that represents the majors music companies and many independent labels; and despite a drop in physical CD sales and downloads, vinyl enjoyed its best sales in 12 years with a total of 4.3 million units sold.

  But 2019 will also remain as the year when Brexit became a reality, with all the consequences that this can have on the music sector.

  Emmanuel Legrand spoke to Geoff Taylor, chief executive of the BPI, about the challenges ahead for Great Britain.

  Taylor joined BPI in 2003 as a lawyer and then moved to the IFPI in London in 2005 before returning to BPI in 2007. He is also in charge of music award show the BRITs, and the Mercury Prize, intended to reward more alternative artists.

  The BPI is one of the founding organisations of UK Music, which brings together all the components of the music sector in order to present a united front to lobby the government.

  The BPI also manages the Music Export Growth Scheme, to fund export initiatives, financed by the Department of Digital, Culture, Media and Sports (DCMS), and distributing grants from £5,000 to £50,000 to independent labels to support export projects.

Geoff Taylor (Picture: Mary McCartney)

You are in quite a peculiar situation at the moment with Brexit, aren't you? It's hard to predict what will really happen. Isn't that a problem for the industry?

Geoff Taylor: I think we need to be sensible in looking at this issue. Europe is a very important export market for the UK. It accounts for about 40% of our total exports, which is very significant. In 2020, nothing's going to change. The UK leaving the EU in January opened a period of transition that will takes us to the end of the year before we're likely to face a new regime in terms of access to the single market, customs, and so on. In 2020 we are therefore not anticipating any significant market disruption.

In 2021 onwards, obviously we would like to see a trade deal negotiated between the UK and the EU that addresses at least two important issues. The first is the ability of our artists to travel freely to Europe to tour and promote their music and for overseas artist to likewise be able to do the same here. The Government has issued a Policy Statement on their plans for immigration, which obviously has implications for artist travel. We understand Government’s desire to bring in new immigration rules that treat visitors from third countries equally and that control migration levels. However we are confident Government also wishes to ensure that UK creative companies can work with the best talent, and that UK artists should not face unreasonable bureaucracy in touring or promoting their music in the EU. We will continue to engage with Government to try to ensure that formalities for short term touring or promotion are kept to a minimum. The EU has offered a 90-day visa-free travel and we hope that the UK will reciprocate and that that issue will be addressed in that kind of simple way.

The other issue is about the importation of physical products. We don't expect tariffs of quantitative restrictions but we anticipate that there may be delays caused by customs procedures and for music equipment, there could be carnets and other bureaucratic hurdles to overcome. Obviously what we would like to see is that trade within the UK and the EU remains as friction-less as possible.

Are you satisfied with the signals you are receiving from the government on these issues?

I am satisfied that DCMS and the Department of Trade (DIT) understand our issues. But, clearly, the negotiations between the UK and the EU have barely begun. We have communicated that these issues are very important to us and the Government has said that it understands. We have to hope that the Government is focused on securing a result from these issues by the end of the year.

Earlier this year, comments from the then minister of culture Nigel Adams seemed to show that although he looked interested in the future of the music sector, he does not have answers to your specific issues. Has it changed since the mid-February reshuffle?

Nigel Adams was a strong supporter of the music industry and a friend to our industry, but he has moved on to another government post and there is now a new team in place at DCMS led by Oliver Dowden, which also includes Nigel Huddleston, Caroline Dineage and John Whittingdale – people that we know and who we believe also understand these issues. Obviously they are not the only people involved in a trade deal and there are clearly a lot of issues at play in such negotiations, and until these negotiations have happened it would be premature to say what the outcome is going to be. The most important thing is that there is regular communication and full understanding on government's part of our issues, and we just have to press our case, which we will continue to do loudly.

On the touchy issue of the copyright Directive, do you have any indication from the government which way they are going to go?

The UK Government has said it will not be implementing the Copyright Directive into UK law. With regard to the issue of platforms accountability, which encompasses both the Value Gap and the need for platforms to put in place measures that address illegal content on their platforms, there are other vehicles, such as the Online Harms Bill, that could be used to address these, and we also need to look at the UK market context. That will essentially be the dialogue that goes on with the Government on this matter.

As an industry, the UK was pretty much behind the Directive. If the UK goes adrift from the continent when it comes to copyright legislation, isn't that going to impact you in a negative way?

What you could be confident of is that we will make sure that the Government ensures that the UK market is protected. We certainly continue to believe that there are user-generated-content services that are not paying properly for rights and that issue needs to be addressed. The UK legal framework is already more favourable than in some member states, which gives us an advantage and we'll keep up that dialogue with the Government over the Value Gap and the issue of illegal content on social media platforms and user-uploaded services. On that subject our Government has already supported action.

Personally, I am on the Creative Industries' Council, which is the official body through which the UK Government makes policy with the creative industries, and I chair CIC's work on intellectual property, and that includes running round tables with social media platforms. So we are in negotiations with Facebook, YouTube and Twitter and with the online market places – Amazon, eBay and Alibaba – and the digital advertising industry over a voluntary code of practices that will put forward new measures and new practical steps to reduce illegal content on their platforms. We have the support of government on that issue, and government has said that if acceptable new measures are not put in place to significantly reduce infringement, then it will look at the potential for legislation.

TikTok recently announced that it had secured a licensing deal with Merlin. Is this going in the right direction?

In the space of social media platforms, there is still a number of platforms that aren't properly licensed and those platforms need to negotiate proper music licenses and pay rights holders properly. They also need to use technology, such as filtering technology, to make sure that their content is not full of illegal content that is unlicensed. Those are reasonable expectations. They are publishing our content, and they need to deal responsibly with it. 

2019 was a pretty good year for the British music market, wasn't it?

Yes, we had a strong 2019. We were up in music consumption, which were up 7.5%, so the growth accelerated in 2019. It's our fifth year of consecutive growth so we are feeling pretty optimistic about 2020. Obviously that's going to depend a little bit on the release cycle, but the underlying trends for music consumption, and for revenues in the UK are pretty healthy.

The music streaming market is getting pretty mature. Do you think there is still room for growth?

I don't agree that the market is saturated. It may be relatively mature but I believe there is room for growth, especially with the increasing sales of voice activated devices, and the prospect of more in-car use of streaming. There are still a lot of households in the UK that do not subscribe to a service yet, and I think that we will see considerable room for growth, albeit the rate of growth might gradually slow down. But it was very healthy in 2019, with a 26% growth in streaming. 

Streaming is breaking all records.

We went through the 100 billion streams barrier in 2019 in the UK. In week 52, we were at something like 2.5 billion streams for the week, so the absolute level of streaming is also quite remarkable and demonstrates just how much enthusiasm there is in the market. It is great news for us that not only do we get more people signing up to services, but also using them heavily.

There's the view in some industry circles that since the subscription rate for most streaming service has not changed in years, time has come for services to increase the rates to, at least, adjust for inflation. Do you share this view?

Labels negotiate their own individual deals with streaming services and then streaming services decide what the consumer price should be. So that's really their call. I think what's notable is that the price has not adjusted to inflation at all over a long period of time and therefore this is something worth thinking about. The evidence in Norway, where there's a an increase in consumer prices, has shown that it did not promote a lot of churn amongst consumers. And I think that's saying a lot about the strength of the product. Consumers who try music streaming absolutely love it and therefore they are quite sticky. It is an area where there is untapped value in the market, but it is also obviously a highly competitive market between the different services and they will have their own views as to when the time is right to adjust their consumer prices. 

Is the level of support you get from the government for the Music Export Growth Scheme sufficient?

The Music Export Growth Scheme is fantastic and it's been a great success. It is generating 12 pounds in return for every pound invested by the government. It's helped a whole series of artists on independent labels to achieve levels of success in export that otherwise they simply would have not been able to reach. We're very proud and pleased with the success of that scheme. It should absolutely extended in time and increased in scope and value. I believe that there is a lot of help that could go to labels to, in particular, reach out to developing markets that are now starting to deliver real value as they grow. At this moment in time, there is a huge new opportunity for exports. The music industry is one of the most successful export businesses that the UK has. The global recorded music business is going to double in the next ten years and I want the UK to get the maximum share of that growth; and that means the government supporting the industry so that we have the resources, the skills and the ability to reach out to every overseas market. 

From a music industry representation's perspective, the British music community has set UK Music some 10 years ago. How do you view the role played by the organisation in becoming the voice of the industry, and its achievements so far?

We work with and through UK Music on many of our issues. I think it's been constructive that the industry sits down regularly to discuss its issues, and wherever possible come to a common position. This has been helpful, although it does not mean that there aren't issues on which there are shades of opinions between member organisations and that we still need to take our individual position on some issues and to lobby independently on some issues where there are some particular concerns to us. For example, the issue of export is particularly important to the BPI. There's still room for individual organisations to have their own voice. But coming together to lobby on issues of common interest has been effective and is very constructive. And the relationship between the different member organisation that take part in UK Music has improved as a result of our collaboration.

How far are we from appointing a new chief executive and a new chairman?

It's going to take a few weeks. Applications are coming in. We do not have a crazy rush, as we have Tom Khiel in place as acting chief executive and he is doing a good job, Andy Heath is not going to run off until we have a suitable person to replace him as chairman. It's all under control and we are pretty relaxed about it. Andy's done a great job over the years and he is going to take this opportunity to step back and handle the baton.

Is there a sense of renewed optimism among your members after so many years of decline?

Absolutely. We are seeing not only healthy market growth but also the fruits of that growth invested into new British artists and that's really encouraging. We feel there is a good pipeline of new British artists, and that they are going to success at home and abroad. And we also feel that there is a tremendous opportunity for the British industry in terms of export and international trade. And as our government looks to building the UK as a trading nation, I see the forecast growth of the global recorded business as a huge opportunity for the UK. We punched above out weight internationally for many years, with one in eight records sold in the world being British, we had the world's best selling album by a British artists nine out the past 14 years, so the UK has a tremendous track record in global trade. And as the global market grows, we have the potential to claim an impressive share of that and to continue grow our export revenues that have already increased from around 200 million pounds in 2010 to 450 million in 2018. Export is representing an increasing share of our overall revenues and I expect that to continue.