Kenny Barr is a PhD candidate at the University of Glasgow, working on the CREATe programme and researching music copyright in the digital age. The PRS for Music Review of Popular Music Concerts Tariff is in progress (‘Tariff LP’). Originally scheduled to end on June 8th, it has now been extended to September 30th. While the review continues, and as we await the findings, his blog post introduces some of the main issues at stake.
THE PERFORMING RIGHT
“The PRS” is the collecting society that collectively administers the copyright in music on behalf of songwriters and music publishers in the UK. Societies that collectively negotiate licences between copyright owner and copyright user have been established throughout the world for over a century. These include; ASCAP (USA), BUMA/STEMRA (Netherlands), SACEM (France) and STIM (Sweden).
The precedent for these societies was set in 1847 when Ernest Bourget, a composer, sued a Parisian café proprietor after being charged for his evening’s drinks. A round of drinks in Paris can certainly be punishingly expensive but this was not Monsieur Bourget’s grievance.
The problem, it was argued, was one of equity. The music performed at the café had been penned by Bourget, but while he was obliged to pay for drinks, the proprietor was under no obligation to pay him for his music. The disgruntled composer argued successfully that the proprietor was unfairly ‘free-riding’ by attracting customers with the promise of musical entertainment. This case established the principle of a performing right in musical works, and as a consequence the first collecting society, SACEM (Société des Auteurs, Compositeurs et Éditeurs de Musique) was founded in 1851.
Today, in almost every instance, when music (live or recorded) is played in a public place or broadcast to the public, PRS issues a licence to the user and collects a fee for the rights holder. At a gig, in a club, in a hairdresser’s shop, on hold to telephone banking, at the skating rink (ice or roller) or even at an agricultural show: if music is played, a licence fee must be paid. And PRS has a tariff for all of these things and more: over 40 different tariffs.
Ultimately, the customer bears the cost of these tariffs through the price of a drink or a haircut or, in the context of a live music event, the price of a ticket. It follows that any change to the existing live tariff will have a measurable consequence for the gig-going public.
THE TARIFF REVIEW
PRS Commercial Director, Paul Clements, explains why the review and consultation has been set up: “The live music sector has changed dramatically since 1988, when the current tariff was set by the UK Copyright Tribunal…We have an obligation to ensure that our licensing is simple, efficient, fit for purpose – and recognises the valuable contribution our songwriters and publishers make to the live music industry” (PRS 2015a).
It is not surprising that the consultation has the support of trade bodies, the Music Publishers Association (MPA) and the British Academy of Songwriters, Composers and Authors (BASCA). A rise in collected revenue would directly benefit the membership of these bodies: publishers and songwriters. A rise in tariff, would not necessarily equate to an increase in revenue however. It is not inconceivable that an increase passed on to audiences could see fewer tickets being sold, resulting in PRS securing a larger slice of a smaller pie. In a market where ticket prices have constantly risen above inflation, the consumer’s willingness to pay cannot be taken for granted!
Rather predictably, the response from concert promoters has been less positive. News of the review is of particular concern to those involved in festival promotion where the programme is likely to feature a mix of entertainments, not simply music. Paul Reed of the Association of Independent Festivals opines, “…a simple raise to the current tariff would have a serious impact on many of our member events, who do operate on extremely tight margins each year. These are largely multi-arts, experiential events built from scratch in the middle of a field and the current PRS percentage is often already a huge chunk of their music programming budget.” (Reed 2015)
Hostility to the PRS tariff is not a recent development. The Concert Promoters Association was founded in 1986 to oppose a proposed tripling of the live tariff from 2% to 6% by PRS. In the event the Copyright Tribunal  set the rate at 3% resulting in “…a resounding success for the CPA” (CPA 2015). It will be interesting to hear what the CPA has to say about the review this time around.
In short, copyright debates are seldom conducted without a significant degree of conflict and rancour. Although the rhetorical battle lines are somewhat predictable and the vested interests of stakeholders may appear straightforward, in reality the ramifications of any change to the tariff are likely to be hugely complex and can only be determined after the fact. However, to assess what could be at stake it is useful to examine the tariff as it stands at present.
The tariff under review, Popular Music Concerts Tariff (‘Tariff LP’), applies only to specific types of music events:
This tariff applies to musical entertainments consisting entirely or almost entirely of copyright light or “popular” music performed, where a charge is made for admission, in any place not otherwise covered by an appropriate tariff. (PRS 2014)
Calculating the rate for concerts and festivals is a relatively straightforward matter: 3% of gross ticket receipts. In effect 3% of the price of every ticket sold goes to PRS and is then distributed among songwriters and their publishers minus an administration fee of 22%. A more comprehensive overview of the tariff can be found here.
This 3% rate may not sound particularly lucrative for rights holders or punitive to rights users but it can, in the right circumstances, represent a valuable income stream for songwriters and publishers. Larger gigs and festivals generate considerable sums in PRS fees. Even new-entrant artists playing support slots or playing unsigned stages at major festivals can receive an unexpected windfall from their share in the performing right fee. Matt Brennan has written about exactly such a windfall in Live Music Exchange.
Conversely, 3% can represent a significant cost to promoters. Indeed, the PRS is generally one of the first expenses factored in to the costings and settlement of a live event spread sheet. While budgets may be trimmed on various production expenses such as crew wages, support band fees, or even brown M&Ms, there’s no way round the PRS fee. In an industry characterised by high production costs and high risk, 3% can be a significant fixed cost.
It seems apparent, therefore, that 3% is considered excessive by some and inadequate by others, but in some countries the equivalent rate for live performance is considerably higher. In the Netherlands, for example, the collecting society BUMA/STEMRA collects 7% (though they rather controversially offer a rebate to promoters and venues that does not find its way to creators). Doubtless the example of territories such as The Netherlands will be cited both as an argument for and an argument against a change to the tariff in the UK.
WHY IS THE REVIEW HAPPENING NOW?
PRS are clear in their justification of the need for a review of the tariff: the rate set in 1988 is no longer “fit for purpose”. Citing their own research, PRS suggest the 1988 tariff grossly undervalued the significance of the song, i.e. the musical work, in generating value in live music events. Their survey data finds that, “…the tariff fails adequately to value the contribution that the musical composition makes towards the success of live concerts and festivals” (PRS 2015a).
It is perhaps no coincidence that PRS has fixed its attention on the live sector. As the recording industry has declined in the post-Napster era, the live music industry has seen steady and sustained growth in the same period. Live music overtook recorded music as the most valuable sector of the three core UK music industries (Live, Publishing and Recording) in 2008.
In their overview of the UK live music industry, Frith et al (2010) attribute this growth to a number of broadly contemporaneous factors. Among the most important of these are: increased consumer spend on live events as the recording industry loses ‘wallet share’, ticket prices rising above inflation and the rise of companies such as Live Nation, SFX, Clear Channel and Ticketmaster. What is important here is that no single factor can be identified as the catalyst for growth.
Another possible contributory factor is that bands may go on tour more frequently to compensate from lost earnings attributed to dwindling record sales. As a caveat, it is important to remember that the top grossing live acts have all at one point or another had successful recording careers.
While the live sector has been growing post-Napster, revenues generated by PRS for Music have also followed an impressive upward trajectory from £360m in 1998 to £666m in 2013 as demonstrated in Table 1. (Samuel 2014: 36).
Table 1: Royalties of PRS for Music (Samuel 2014).
Table 2 shows that, as a percentage share, Live has doubled from 2% in 2003 to 4% in 2013: this is notable growth by any measure. But as an overall proportion, live is dwarfed by International, Broadcast and other elements of Public Performance.
Table 2: Breakdown of PRS for Music royalties (Samuel 2014).
These figures are illuminating in a number of ways. First they show the rapid decline in income from Recorded Media Audio Products as the (terminal?) decline of the CD format continues. They also show Broadcast and Public Performance to be valuable sources of revenue, but also fairly steady in terms of their share. Aside from Live, the growth areas are Online and International. But it remains to be seen whether Online can compensate for the losses incurred in Recorded Media in the long run. It is also unclear how much untapped potential remains in International markets. The jury is out!
In light of these uncertainties it is understandable that PRS are targeting the buoyant Live sector as an area of interest. The society lists 4 Live sector streams that are not currently accessible to the Live tariff and, it is claimed, not being equitably shared with songwriters and publishers.
- Secondary ticketing
- Booking fees charged to consumers
- Sponsorship and advertising
- Other ancillary revenues (such as merchandising sales and catering at live events, parking concessions and camping/accommodation)
Aside from being something of a ‘greatest hits’ of contentious issues in the contemporary live music sector (if in doubt, see http://livemusicexchange.org), this list reflects areas in which the industry has managed to drive growth and generate income that is seldom passed on to creators.
If successful, an extension of the tariff to cover these revenue streams would mean that creators would gain access to hitherto inaccessible income. Moreover, PRS could increase overall revenues from Live without increasing the 3% tariff. Instead they would have a slice of a bigger pie.
It could (and will) be argued that an extension of the scope of the tariff is justified as a means of curtailing ‘free-riding’ at the expense of songwriters. But it could (and will) also be argued that PRS has no valid claim to such sources. One thing that seems certain: it will be argued!
In the event that PRS propose a change, it is almost certain that The Copyright Tribunal will arbitrate to decide the extent of any increase in tariff and any extension to its scope. Intervention by the Tribunal is likely to be a time consuming process so it is safe to say that no change to the tariff is imminent.
ONE MORE THING…
To conclude, it seems universally acknowledged that there have been seismic changes in the live music sector and across the broader music industries since 1988. In this context it seems entirely reasonable to suggest that a root and branch review is indeed required.
However, this reasoning overlooks an important historical detail: a live music tariff review was conducted as recently as 2010. The outcome of that review was that no change should occur. But PRS state that the conclusion of the 2010 consultation did not close the door to subsequent change:
The decision was taken following the consultation not to change Tariff LP in 2011, but instead to use the consultation as the starting point for an ongoing review of the live music industry, including gathering further evidence to inform a future review of the Tariff. (PRS 2015b: 5)
The most obvious question is “what has changed?” No doubt submissions from interested parties to the current consultation will reveal how the debate has moved on (if it has?) since the last review. Until then, watch this space!
Copyright Tribunal (2015) https://www.gov.uk/government/organisations/copyright-tribunal accessed 31/05/15
Concert Promoters Association (2015) ‘Concert Promoters Association: History’, Available at http://www.concertpromotersassociation.co.uk/about accessed 28/05/2015
Frith, S. Brennan, M. Cloonan, M. Webster, E. (2010) ‘Analysing Live Music in the UK” Findings One Year into a Three-Year Research Project’, IASPM@ Journal, 1(1), 1-30.
PRS for Music (2014) ‘Already Familiar with Music for Business?’, Available at http://www.prsformusic.com/users/businessesandliveevents/pages/existingmusicforbusinesscustomers.aspx accessed 28/05/2015
PRS for Music (2015a) ‘PRS for Music announces tariff review of festivals and concerts’, Available at http://www.prsformusic.com/aboutus/press/latestpressreleases/pages/tariff-review-of-festivals-and-concerts.aspx accessed 28/05/2015
PRS for Music (2015b) PRS for Music Popular Music Concerts Tariff ‘LP’ Consultation https://www.prsformusic.com/SiteCollectionDocuments/PPS%20Customer%20Consultation/tariff-lp-consultation/prs-for-music-live-consultation-2015.pdf accessed 30/05/2015
Reed, P. (2015) cited in ‘Live execs keeping close eye on PRS for Music tariff review’, Music Week, 12/08/15, Available at http://www.musicweek.com/news/read/concern-at-potential-prs-for-music-tariff-increase/061722 accessed 28/05/15
Samuel, M. C. (2014) ‘Winds of Change. Journey of UK Music from the Old World to the New World. Review of Economic Research on Copyright Issues, 11(2), 27-59.
 To get a sense of the scope of their activities, the April 2014 PRS distribution shows that the society licensed 2,387 separate usage sources. There were over 78m unique performances during the quarter, comprising 1,054,940 distinct works (PRS Distribution Letter April 2014).
 “The Copyright Tribunal’s primary purpose is to resolve commercial licensing disputes between copyright owners or their agents (collecting societies) and people who use copyrighted material in their business” (Copyright Tribunal 2015).
 “Gross receipts means all monies paid or payable in respect of admission charges in connection with any entertainment to which this tariff applies, less library and party booking discounts and Value Added Tax or any other government tax or imposition of like nature for the time being in force.”
 For example, if a concert promoter sells 1000 tickets at £10 each £240 is paid to PRS and proportionately distributed among the writers and publishers of the songs performed minus an administration fee (1000 x £10 = £10000 – 20% VAT = £8000 @ 3% = £240). It follows that larger shows with higher ticket prices will generate a larger pot to be shared by rights holders. Large festivals such as Glastonbury or T in the Park will generate hundreds of thousands of pounds for PRS members.
 This author notes that a ticket to see American Jazz-Rock royalty Steely Dan is considerably more expensive than a ticket to see Stoke-on-Trent’s excellent Nearly Dan tribute act play the same songs. Quantifying exactly what contributes to the value of a live music event is a hugely subjective matter.
We have received a comment from PRS for Music which we are happy to post to clarify the article above:
“If you don’t mind, I’d like to clarify one point . The headline administration rate is actually 20% rather than 22%, and a maximum deduction per event of £1,250 applies. Additionally, events licensed through the Live Concert Services are £125 per act, per event. Consequently, the effective average admin rate is significantly below the 20% maximum (I’m not able to share the specific figure unfortunately).
Aside from that, the article is well-informed and thorough.
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