A new report from UK royalty collection society PRS for Music points to growth within the music sector despite the economic problems and continuing piracy issues – with the overall size of the UK music industry growing by 4.7% to be worth £3.6B in 2008. The report also highlights the need to create a balanced account of revenue across the full spectrum of the industry. As well as traditional label revenue, and the substantial live market, the wide reach derived from B2B revenues, such as licensing, advertising and sponsorship, increased by 10% to £925M during 2008, despite a slump in spending by major advertisers. You can download the full PRS report here.
 
Will Page, chief economist at PRS, emphasizes the importance of brand revenue to the overall picture. He highlights data provided by FRUKT – which outlines an £89M spend in music from brands – saying it “introduces us to a source of revenue which isn’t new, but has arguably been omitted from much of the industry analysis to date”. Advertising support (£24M) and live sponsorship (£23M) dominate, however there is a ground swell with regards to digital investment (up almost 20%) and brands being prepared to step away from the big names and events to embrace niche and emerging music. Jack Horner, Creative Director, FRUKT, says: “Brand investment in music is more innovative than ever before, with more consumer brands understanding that a long term view and clear definition of a role within music is critical to their acceptance and success. As brands move from the old approach of badging and towards developing content, music offers the opportunity to create truly engaging platforms. These investments in music are becoming a valuable revenue stream for the music industry, hence the openness with which all parties now approach collaborations and the increase in deals”.
 
Brand investment: the numbers
 
•    Advertising support = £24M (27%)
•    Live music sponsorship = £23M (27%)
•    TV = £25M (28%)
•    Event creation = £8M (10%)
•    Digital = £5M (5%)
•    Artist endorsement =  £3M (3%)
 
We’ll be looking at this area again in our upcoming FRUKT Music Intelligence Report 003. In the meantime it’s worth considering how ingrained endorsements have become in both the brand psyche and the bank accounts of major artists.  
 
Beyonce was ranked 4th on Forbes Celebrity 100 earlier this month with fairly staggering earnings of $87M. The Beyonce brand has gone from strength to strength with revenue diversifying away from the more traditional roots of album sales. That’s not to say she’s not shifting plenty of albums, around $29M of her earnings came in from direct music sales. However, other revenue generators based around the Beyonce brand dwarf this. She netted $14M in a combination of concert ticket and merchandise sales, highlighting the importance of her new tour on forthcoming earnings. However, putting album sales and live revenue to one side, Beyonce has pulled in $15M from her fashion line (Dereon) – she has announced her intention to give away Dereon handbags and a pair of Dereon sunglasses via a text competition during her current tour – and a massive $20M from brand endorsements.
 
With a string of endorsement campaigns for Armani, Nintendo, L’Oreal and Trident gum under her belt, the figures here highlight just how much brands are financing music. The question however is whether brands are getting the required ROI by aligning with artists in this way? Simply badging a product with a celebrity, or having product touched by the hand of a major singer can often provide the midas touch for artists but not always for the brand. Many brands are now moving to deeper relationships with musicians that offer additional creative freedom for the acts involved and also provide more long-term investment opportunities for fans. Badging certainly has its place, but followed up with deeper long-term music investment it can offer a more lucrative reward for all parties – brand, band and fan – over time.

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