Tuesday 14 April 2015

PRS for Music targets live music and festivals

PRS for Music (PRS) have launched a new eight week long Popular Music Concerts Tariff (‘Tariff LP’) Consultation to review the licensing structure for the use of music in the live music industry in the United Kingdom. Tariff LP is applied to ticketed live popular music events such as concerts and festivals. The consultation will run from 13th April to 8th June 2015.

Tariff LP is a Tribunal tariff that was set in 1988 by the Performing Right Tribunal, which later became the Copyright Tribunal. Having failed to amend the Tariff in 2010 (after a much criticised review which alienated large parts of the festival sector who said the review was poorly timed as it conincided with their busy festival season in the UK) the PRS say the purpose of the 2015 consultation is to seek views on the findings of a comprehensive investigation by PRS for Music into the changes in the live music industry since 1988, "to ensure that PRS for Music is operating a tariff that is fit for the purpose of licensing live popular music events going forward."

The Consultation Paper is somewhat critical of the 1988 Performing Right Tribunal's decision - albeit with hindsight and acknowledging this is because of changes in the live sector. The paper notes "There were, and still are, two essential elements to Tariff LP, namely (i) the revenue base, and (ii) the tariff percentage rate. The 1988 Tribunal decision did not focus on the revenue base, "doubtless because at that time the only material revenue stream was the ticket price. This was uncontroversial and therefore not considered by the Tribunal in 1988. The position is however very different today. As to the appropriate tariff percentage rate, the 1988 Tribunal regarded the musical composition’s contribution to a live concert as relatively minimal, with the production and artist performance being “significantly more important” than the underlying PRS for Music repertoire". Tariff LP currently charges 3% of gross receipts per event.

The PRS say their tariffs need to be 'fit for purpose' and that the tariffs need to reflect the market in which they operate. PRS consider that, in the following respects, the current Tariff LP does not satisfy this criterion:

1. The Tariff fails adequately to reflect the changes in the revenue structure of live events since 1988, including the wide and varied revenue streams from which many live events now benefit;

2. The Tariff fails adequately to value the contribution that the musical composition makes towards the success of live concerts and festivals;

3. The licensee declarations made under the Tariff fail properly to account for the actual final
price (including e.g. booking fees) that consumers pay for access to many live concerts, thereby ading to ongoing underpayment under the Tariff;

4. The Tariff fails to account for free or discounted tickets and, in this regard, the revenue base as defined in the Tariff currently does not reflect the value of this type of admission. 

The PRS note that the economics of the live industry, including its revenue stream structure, have changed significantly since 1988. Part of the change in the live industry’s revenue structure has been driven by the internet, having shaped for example the way event tickets are sold and bought. The PRS would like to explore applying the Tariff to:

1. Secondary ticketing
2. Booking fees charged to consumers
3. Sponsorship and advertising
4. Other ancillary revenues (such as merchandising sales and catering at live events,
parking concessions and camping/accommodation

Targeting secondary ticketing is an interesting move. Whilst some promoters and artistes undoubtedly do benefit from commercial arrangements in the secondary ticketing market - many do not and many oppose the secondary ticketing sector, broadly classifying it as 'touting'. The PRS argue that "live music event organisers seem to derive considerable value from the secondary market through “direct allocations", whereby tickets, often with premium features, bypass the general sale and are allocated to secondary ticketing agents who often sell them at high mark-ups, in exchange for a share of the proceeds to the event organisers.  We consider that the full price paid by consumers on these allocated tickets falls within the scope of the current Tariff LP." The Government recently announced a year long statutory review of secondary ticketing as part of the Consumer Rights Bill which was amended to require more transparancy from ticket sellers (and secondary ticketing platforms). The Competition and Markets Authority also recently issued a guidance to secondary ticketing companies. 

The PRS have also released details of a 2014 online survey of 780 consumers who went to live events which (perhaps unsurprisingly) shows that: (a) The value of a musical composition is broadly commensurate to the value of the performance at live events and (b) The value of music to a festival is highly significant and far outweighs other factors in influencing whether an individual should attend. The survey is no doubt intended to fight back against the Tribunal's comment in 1988 that the musical composition’s contribution to a live concert as relatively minimal, with the production and artist performance being “significantly more important” than the underlying PRS for Music repertoire, wth the Tribunal then saying  “[T]he main attraction in all such shows is the stars who perform and the production, rather than the actual music used”. The 2014 survey also found that other festival entertainment activities are deemed insignificant when compared to the importance of music, something which may come as a surprise to many festival organisers. The survey was conducted by FTI Consulting.

Launching another consultation just as the busy UK summer festival and touring season kicks off seems somewhat odd (again!) although the PRS says " Where we are considering or proposing to make significant changes to a tariff or to introduce a new tariff, this includes undertaking fair, reasonable and proportionate consultations and negotiation" and "We aim to set reasonable terms and to apply and administer our schemes fairly and consistently". The 2010 consultation which was launched in June 2010 was twice extended after loud complaints from promoters and festival organisers, eventually closing in 31st December 2010.  In November 2011 PRS for Music has announced the end of its customer consultation on royalty rates for popular music events in the UK. After an extended period of listening and engaging with customers, representative organisations and key stakeholders, the decision was made that no changes should occur to the rate or structure of the tariff. The rate remained at 3% of ticket receipts.

The Copyright Tribunal has jurisdiction over all existing and proposed schemes operated by PRS for Music.

For openesss, the writer must say that he works with the Glastonbury Festival, as well as the Association of Independent Festivaks in the UK, and Yourope, the European festivals associaton.


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