Written evidence submitted by Ninja Tune Ltd

DCMS Select Committee enquiry submission - ECONOMICS OF STREAMING MUSIC

NINJA TUNE LIMITED (UK company reg.no: 04770301)

We are a record label employing over 70 full time staff with offices in London, Lost Angeles and Berlin. We license music from recording artists, we currently have 45 artists on our roster. We fund (and where requested advise on) recordings. Then in consultation with the artists we release and exploit the recordings via: CD and vinyl sales; digital downloads and streaming, synchronisation licensing, public performance and broadcast administration and licensing. We build and manage promotional campaigns around the world, alongside worldwide physical and digital distribution and marketing campaigns.

We make it our business to be as open and transparent about the deals we do as part of this exploitation. We are a signatory to the WIN Fair Digital Deals Declaration (FD3). We pay through to artists, on the same basis as if it were clearly attributable, any non-attributable receipts and black box income and other lump sum payments (including recent Spotify share sale receipts), on a pro-rata basis using recent or applicable sales data to allocate the income.

We generally do 50/50 net profit deals with our artists, subject to variations negotiated with each artist. We do not recoup salaries, overheads or our general running costs from artists. 50% of net profit is the minimum profit split our artists receive, some receive more than that. The average share of our net profit (excluding salaries, overheads or our general running costs) we pay to artists is 53.21%.

The 46.79% we retain is used to fund our 70+ staff worldwide, our infrastructure to release and exploit the recordings, and to risk/fund the 50% recoupable campaign costs (manufacture, promotion, distribution, manufacture, mechanical royalties etc), and to risk/fund the 100% recoupable costs of the advances and recording costs. Neither campaign costs nor advances and recording costs are returnable by the artists to us.

The term of our licenses tend to be between 10 and 15 years, some are shorter than that, and some older deals are longer than that. It is increasingly hard to sign successful artists because they have many options for releasing their records, from other record labels, label service companies, distributors and self-releasing.

The commercial marketplace for artists has improved since the advent of the streaming economy. More artists signed to Ninja Tune are better off now in the streaming era than in the pre-streaming era.

Ninja Tune Limited headline financials:

Broadly income from recording exploitation breaks down as:
Physical = 12%

Downloads = 5.5%
Streaming and = 51.5%
Synchronisation licensing = 27%
Broadcast & Performance = 4%

Annual turnover (£)

2017 = £12,650,000

2018 = £13,800,000

2019 = £12,980,000

Total direct investment in new artist projects including promotion and marketing (£)

2017 = £2,210,000

2018 = £2,230,000

2019 = £1,950,000

Of total investment in artist projects, how much was paid out to artists in advances including recording costs (£)

2017 = £830,000

2018 = £920,000

2019 = £766,000

Royalties paid to artists in addition to the above advances (£)

2017 £1,894,085

2018 £3,077,613

2019 £3,361,779

Gross profit after cost of sales including royalties (%)

2017 = 42%

2018 = 47%

2019 = 42%

Net profit after overhead including salaries (%)

2017 = 7%

2018 = 15%

2019 = 8%