Chrysalis sings the praises of ad royalties as profits jump

The music publisher says ad campaigns boosted its profits. Let's hope this trend doesn't go too far.

Last Updated: 31 Aug 2010

Much has been made of the music industry's struggles in the face of internet downloads and piracy. But there is at least one growth area: advertising. UK music publisher Chrysalis said today that its revenue from advertising has doubled over the last 10 years, while it's also helped to relaunch the careers of 'dozens' of artists who would otherwise have seen their royalties run dry. Not the anti-establishment attitude you might associate with rock'n'roll – but at the moment, the industry doesn't have much choice...

Andy Mollett, Chrysalis' finance director, said income from music used by the ad industry now makes up about a third of its revenue. That's an impressive gain, particularly when you compare it to 10 years ago, when the figure was half that. And it's not just the ad industry that's boosting the bottom line: apparently, when old songs are used on films, people rush to download them. So at least the internet is having one positive impact on the industry: once upon a time, finding rare tracks would have meant hours of crate-digging in dusty record shops. Now, all we have to do is log on to popular iStores – which means cult followings are far easier to come by.

According to Mollett, in some cases, 'golden oldies' played on adverts have been so popular that the artists have then come out of retirement to do live concerts for their newly acquired fans. The 'advert effect' has even propelled songs which were released decades ago back to the top of the charts - as in the case of Tears for Fears' 'Mad World', after it was used in Donnie Darko. The Yeah Yeah Yeahs' track 'Gold Lion', used in an iPad advert, and Lightning Seeds song 'Lucky You', used in a Halifax building society campaign, were also both big hits this year.

Chrysalis' third-quarter figures, released today, already look more positive than three months ago. While its net debt has grown (from £15.8m to £18.7m), Chysalis said that's down to the acquisition of music rights company First State Media. The company is still on track for a pre-tax profit of £1m by September, though (up from £500,000 in 2009), helped in no small part by a number one album from Pendulum, the Australian drum'n'bass act.

So it looks like music publishers have cottoned on to the fact that, if all else fails, getting your song on an advert is a great way to boost profits. Let's just hope they don't start making their artists write songs that suck up to big brands...

In today's bulletin:

Asda and Tesco target Ocado - as online retail boom continues       
Bad managers to blame for local government inefficiency?
Rise of hackers behind Intel's $8bn McAfee bid
Chrysalis sings the praises of ad royalties as profits jump
Small businesses bear the brunt of slowing bank lending

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