In December 2015, collecting society PRS for Music published a summary of responses from its consultation on the terms of its Popular Music Concerts Tariff (‘LP’) that is applied to ticketed live popular music events such as concerts and festivals. To discuss the document, we asked Mark Davyd of Music Venue Trust to comment from the perspective of live music venues, and we asked John Markey, drummer and backing vocalist in Glasgow band Young Aviators, to give the perspective of a musician in receipt of PRS royalties (click here to go straight to John’s piece).
Response to PRS for Music review – Mark Davyd
This is an article about the technicalities of the PRS for Music review of the Tariff LP and how that Tariff and the review impacts upon grassroots music venues. As you can probably imagine, it’s going to be full of hilarity, puns and double entendres because it’s a really sexy subject that just makes you want to read on.
Reading on is pretty important, though, because Tariff LP is much more important than you think, and how PRS for Music choose to resolve the challenges it brings to the grassroots music venue sector is incredibly important, not just for the Tariff itself, and the bands and musicians that play in those venues, but also for what it says about whether the music industry is really going to listen to what that sector is telling them. Whether PRS for Music seize the opportunity of the review to act or to simply say some nice words is one of the first major practical tests we are going to have on what action the music industry itself is going to take to protect those venues.
Firstly, the technical bits: You can skip these if you already understand the intricacies of live music licensing.
Tariff LP is the mechanism by which PRS for Music licence their writers’ works to live music venues for them to be performed. The Tariff says that if any works represented by PRS for Music are being performed, the venue must pay a licence fee to PRS of 3% of the ticket money. The 3% figure was established by a Tribunal in 1988. Another outcome from that Tribunal was that alongside the 3% figure, PRS for Music was also granted the right to establish a “minimum fee”, i.e. a charge which any venue using any of the works they represent during a live performance must pay. In 1988, that minimum fee was £15. At the moment it’s £36, in 2016, it will be £37. Those increases are based on inflation.
Tariff LP means that musicians who write music get paid for the music they have written. There’s not much to object to about that concept, people should get paid for their work. In our work for the Music Venue Trust, we haven’t come across many people who believe that this central core idea is fundamentally wrong.
What we have discovered though, and what has clearly emerged during PRS for Music’s review of the Tariff LP which they set up in July 2015, is that the actual practicalities of what Tariff LP means for small grassroots venues is just one of a range of things that are making them economically unsustainable. Tariff LP, particularly the minimum fee, is effectively an additional cost on shows that are already making a loss, with no specific financial benefit to artists and musicians from any show which might be making a profit. If a show is already possibly going to make a loss, Tariff LP is the fee that will send the promoter to the cash point to take out his own money. If a show is going to make a profit, in grassroots music venues the contract between the band/agency and the promoter already means that the band will get 85% of that profit. This is very technical, but stick with it; in any case in which a profit is being made, Tariff LP is actually paid 0.45% by the promoter and 2.55% by the band. That’s the band that are probably performing their own material and are PRS members, paying themselves by deducting the money from the profit on their show and then getting it paid back to them at a later date. In essence, then, venues have to pay a minimum of £36 per gig to PRS for Music for any gig which features a PRS registered performer, even when the gig is already making a loss (or the PRS tariff will push it into the red).
The easiest way to explain what that actually means when it comes to what venues are dealing with is to let the venues tell you about it themselves in their own words, which is what the Music Venue Trust did when replying to PRS for Music about the review.
Let’s start by talking about the typical show that takes place at a grassroots music venue featuring new, locally based bands – we’re talking about a Tuesday evening new band night in a rural town like, for the sake of argument, Harlow . The average ticket price for those new band events is £5 – it hasn’t changed much since 1988. The average number of paying attendees is 40. The total value of tickets sold is £200. If the minimum tariff applies, it equates to 18.5%. This is what venue owners told us it practically looks like:
“We had the local rep down, and we showed him the numbers. On one show, at £2 because it was young bands, 24 people paid to get in. Three bands played for about two hours total, one band played a cover version. PRS rate? £36, which is 75%. The more risks we take with programming, the higher the PRS fee in percentage terms.” – venue owner
“The minimum fee represents an expectation that the total door gross will be £1200. At a £5 ticket, that’s 240 people. I’m not sure who dreams these things up, but they certainly haven’t been to any gigs recently” – venue owner
“Last year we paid the minimum fee on every PRS show we declared. Every single one. Not one of those shows had a 3% of gross that was anywhere near £36. We’re essentially being fined for not being bigger”. – venue owner
This next quote is pretty important, so even if you’ve skimmed the rest of the article I want you to stop and have a think about what it means for the future of grassroots music venues:
“They can blithely go on trying to enforce getting money we haven’t got out of us if they like, but in the end if we can’t work with them to create something that is actually doable then we won’t be doing it at all” – venue owner
And if that didn’t catch the attention of PRS for Music, maybe this one did:
“We’ve had to adopt a blanket policy; no PRS members, no PRS songs”. – venue owner
Throughout these quotes and the whole of this article, you’ve probably been thinking “well, £37 doesn’t sound like much”, but let’s do some maths. In understanding the challenges Tariff LP presents, big maths is really important, because it’s only by focusing on the local maths that we’ve missed the big picture.
2 typical shows like this per week, at the minimum fee, in 250 venues across the UK, equates to £18,700. Per week. if you add all the £37s across the UK during 27 years since 1988 together it would come to £24million (in today’s money, allowing for inflation)
Let’s compare that with the actual legal requirement, the 3%:
2 typical shows like this, per week, taking £200 on the door, in 250 venues across the UK, charged at 3%, equates to £3,000 per week. If you added all those £6s across the UK during 27 years since 1988 together it would come to £4.2million (in today’s money, allowing for inflation).
The difference between the 3% and the minimum charge would be £19.8million. Let’s be incredibly generous, and cut that in half, call it £10million. The conclusion would be the same: The grassroots music venues sector has been overpaying PRS for Music, above and beyond the 3%, for more than 25 years, to the tune of millions of pounds. In that time, our grassroots music venues have sharply declined, the quality of the offer has suffered from under investment, and dozens and dozens of iconic venues have closed. Tariff LP isn’t the main cause of that, it’s just one of the contributing factors; the whole approach to grassroots music venues has been wrong, and this is just one element of that picture.
Who’s at fault here? I think it’s incredibly important to say this very clearly and very strongly: No one is.
Bands, musicians and writers deserve to get paid for their work. PRS for Music have simply been doing their jobs protecting writers. The grassroots music venues are, and were, all operated by individuals in a competitive market; there was no single organisation to take a global look at the issue and speak up to say “this isn’t working”.
The review called by PRS is an opportunity to put that right. The future of musicians and venues are more closely aligned than at any time in the last thirty years. We’ve got a clear and coherent case for music venues being made by the Music Venue Alliance. It may be that one solution could be to calculate the tariff as a percentage of the (profitable) return on a use of a PRS title (or in relation to the size of audience) rather than using an all purpose minimum fee.
We believe that in 2016, we can work with PRS for Music to get in place something that benefits everybody.
John Markey’s response
I have been asked to provide a companion piece to Mark Davyd’s informative article on the upcoming PRS Tariff review, focusing on what the Public Performance Tariff means to me as a musician who is in receipt of PRS distribution statements. To do so I’ll firstly outline who exactly I am as it’s a good place to start. I am the drummer and backing vocalist in a band named Young Aviators. We are based in Glasgow, released our first album on a small Glaswegian record company in 2013 and have since been touring, writing and are currently recording the bones of what will be a second album in the not too distant future.
I would consider myself to be typical of many musicians in the UK in that music is not my only source of income; my income from music is very modest indeed (probably totalling around £5,000 for 2015 if it was all worked out, which it hasn’t been, but it’s a decent guesstimate). I play gigs regularly with Young Aviators as well as with friends as part of an acoustic covers act; I also DJ at least once a month to keep myself afloat. I study a post-graduate degree part-time and work other jobs in education and retail, yet apart from generally being tired, I would still aspire to one day making a living solely from music if possible.
Of that total earned from music, £1,000 came from PRS (the exact figure is slightly higher but I’ve rounded down to the nearest £100). This would make it an important part of music earnings in a year, no questions asked. The majority of that money was earned through radio play, and sync rights (thank you, minor BBC home design programme!). A rough total of 15% of this figure was earned through the Public Performance Tariff. To lose this would not be detrimental to my current lifestyle. It might sting a little, but I’d survive. The bulk of our earnings through PRS have come from other revenue streams and we have only invoiced for live shows staged through established and large promotions companies; however, this is through unawareness rather than ethics.
I will freely admit that I am rather ignorant of a lot of the PRS’s workings (probably something else that makes me typical of a lot of their members) and was unaware of much of what Mark outlined, including the 3% of ticket money and the minimum fee. As a band we have only invoiced for playing venues we would consider established: 150+ capacity, through reputable promoters, part of a larger tour, etc. We have never invoiced for smaller, ‘local’ venues, as we were unaware that we could. I’ve only been handed PRS forms in larger venues and perhaps that is why I assumed that these were the only venues that could be invoiced.
So, knowing what I know now, would I attempt to earn more money through the Public Performance Tariff by invoicing smaller, local promoters for my music? No. Mark has clearly described the potential impact that such charges can have on small promoters/venues, and as a fan of live music I would hate to pile more pressure on such venues, particularly since they’re closing at such an alarming rate. Perhaps a charge based on attendance would be a possible? If a show sells over 100 tickets then a minimum charge can be applied? I will watch for the outcome. And I’m sure, as a band, we’ll pay more attention to the PRS tariffs in future.
Drummer and backing vocalist in Young Aviators
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