The recorded music industry may be in decline — a victim of piracy and file-sharing — but Britain’s music industry as a whole grew by nearly 5 per cent last year, according to independent research published yesterday.

PRS for Music, the body that collects royalty payments and distributes them to artists and composers, said that the overall size of the UK music industry had risen by 4.7 per cent to £3.6 billion during 2008.

The figures, which were calculated by Will Page, the organisation’s chief economist, show that while the recorded music sector shrank by 6 per cent last year, the value of the live music sector increased by 13 per cent.

There was also a 14 per cent rise in the revenues collected by PRS for Music and a 7 per cent rise in sums collected directly by record companies from digital licensing — from the owners of web-based services such as Spotify and from the use of recordings in film, television, games and advertising.

Mr Page said that such revenues had grown for a second consecutive year and accounted for almost a fifth of the domestic income enjoyed by record companies, while a quarter of the music industry’s entire income was now derived from “business to business” revenues, such as licensing, advertising and sponsorship, which rose by 10 per cent to £925 million during the year, despite a drop in spending by advertisers.

He added: “What [the statistics] provide is an understanding of a value chain, which helps to counter much of the Armageddon-style hysteria that surrounds the state of the UK music industry. The point is that value doesn’t just disappear — rather, some will be lost, some displaced and some new revenues will enter the industry.”

Among the most encouraging aspects of the research, Mr Page said, was evidence that UK artists and songwriters were punching above their weight on the international stage. He said that in 2008, one in ten albums sold in the United States was by a British act, with the UK accounting for 9.8 per cent of single track downloads in the United States. This was due in part to Coldplay, whose album Viva La Vida sold 2.1 million copies in the US, and Leona Lewis, who topped the 2008 download and airplay charts in America.

Elsewhere in the report, a comparison of the sums collected from overseas and paid overseas by the world’s ten biggest performing rights organisations reveals that the UK is one of only three countries that can claim to be a net exporter of “repertoire”, alongside Sweden — presumably boosted by Abba sales — and the US.

Mr Page admitted that the data for live music revenues in the report, put at £1.391 billion, was only an estimate. However, he provided details to support that figure.

He said that it had been calculated from returns paid to PRS for Music by concert organisers and adjusted for booking fees and VAT. To that was added data from Tixdaq, which collects sales information from “secondary” ticketing platforms, such as eBay, Seatwave and Viagogo, along with figures compiled by Ticketmaster and Mentel, the consultancy, on food, drink and merchandise sold at live events.

Mr Page added: “Make no mistake, the live music industry grew in 2008 — more events, more bands, more tickets and, importantly, higher ticket prices.” He said that the fall of only 6 per cent in retail spending on music was “actually quite an achievement” in view of the economic slowdown and tough conditions on Britain’s high streets, which saw Woolworths and Zavvi, the specialist music retailer, go bust at the end of last year. On the question of whether the growth in digital revenues could ever make up for the drop in sales of CDs and other “physical” music, he said: “Our answer would be that ‘it might — but be patient’.

“If one were to project forward current volume and value trends for both sectors, a ‘levelling-off’ effect might be on the horizon by 2011.”

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