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MMF and FAC hit out at proposed PRS royalty rate for livestreamed shows

By | Published on Monday 7 December 2020


The UK’s Music Managers Forum and Featured Artists Coalition have hit out at song rights collecting society PRS over its proposed royalty rates for livestreamed shows. The two trade groups argue that there is a “staggering disconnect” between the rate for real world gigs and the proposed rate for online gigs, and that that proposed rate has been “determined without consultation” of the wider music community.

Although livestreaming has been a thing for more than two decades now, it’s only since the COVID shutdown sparked much more mainstream interest in ticketed livestreamed concerts that the music industry has really started to consider how such events should be commercialised, and what specific music rights are being created and exploited.

Livestreamed concerts are interesting in that they bring together pretty much every strand of the music industry, they being both a live show and recorded content at the same time, relying on and further enhancing the direct-to-fan relationship, and providing great opportunities for merch sales and brand partnerships.

But established artists usually have different business partners for each different strand of their individual artist businesses, including labels, publishers, collecting societies, booking agents, promoters, venues, ticket agents, direct-to-fan platforms, merchandise makers and brand partnership brokers. And if all those companies get involved in a livestreamed show there is a risk that between them they’ll want 200% of the money made.

And then there’s the customary debates around copyright. The music industry licenses live performances of songs and the streaming of songs very differently. So is a livestreamed concert a live performance or a stream?

The so called performing rights of the song are definitely being exploited in a livestream, but are the mechanical rights too? Because with Anglo-American repertoire the former are controlled by societies and the latter by publishers.

And if an artist’s record contract gives the label ownership of all recordings created while the deal is active, does that include these live recordings?

As a plethora of artists started livestreaming during the COVID shutdown – initially for free and then shifting over to ticketed shows with higher production values – behind the scenes all these questions about business partners and copyright were being raised. As part of that, PRS started developing a bespoke new licence for livestreamed shows.

For ticketed live shows in the UK, the main PRS licence charges around 4% of gross ticket sales. With on-demand streaming, societies and publishers together usually get 12-15% of whatever advertising or subscription monies are allocated to their repertories, based on total consumption share.

For livestreams, PRS is proposing a pilot scheme that would charge 8% on the first £50k of ticket sales, but the percentage share would then increase on each additional £50k of revenue, so that on ticket sales above £450k the rate would be 17%. The plan is to charge these rates retrospectively for livestreamed shows that have taken place in the UK this year.

The licence would seemingly cover both performing rights and mechanical rights, which means the publishers are involved in the new scheme via MCPS, as well as PRS itself.

There is an added complication in that collective licensing is traditionally done on a territorial basis, so PRS usually only licenses concerts taking place in the UK. But livestreamed shows taking place in the UK obviously have a global audience.

In the digital domain societies have been slowly moving to a multi-territory licensing model, and PRS says its pilot livestream licence will be global. Although other societies around the world are also developing or evolving livestream licences, and some of them argue that royalties should be paid to the society in the country where the ticket-buyer lives, not where the livestreamed show takes place.

In an open letter to PRS boss Andrea Martin, MMF and FAC – whose members have staged a number of headline-grabbing livestreamed shows this year – say that the proposed 8-17% rate is “unworkable”.

Applying it retrospectively will result in past shows that provided vital income for artists and their crews making a loss. And moving forward, it could stop the longterm potential of livestreaming from being realised, with most people reckoning livestreamed shows will remain popular even one COVID is over, if only the right business model can be found.

The letter begins: “PRS’s proposed experimental tariff for livestream events is unworkable for artists. A starting rate of 8% of gross ticket receipts – rising to 17% of gross ticket receipts – will make livestreaming unviable, for both the smallest emerging artists and the biggest superstar acts. By comparison, the PRS tariff for a live in-person concert is 4/4.2% of gross ticket receipts. This is a staggering disconnect. A ticket is a ticket”

“Even worse”, it goes on, “these seemingly arbitrary terms have been determined without consultation, and with an intention that they be applied retrospectively – a decision that will add to the grave financial distress facing artists and their wider teams, especially in the midst of a pandemic”.

“Everyone agrees that songwriters must be compensated and livestreams licensed properly. Indeed, the vast majority of our members are songwriters or their representatives. But in a year when live shows have effectively shut down, and with more uncertainty ahead, livestreaming has presented artists with one of their few opportunities to perform and connect with their fans”.

“The larger most-successful events involve significant production costs, and have provided a lifeline to crew and other industry workers. At the other end of the scale, livestreaming has been increasingly important for emerging artists and those operating in niche genres. For the sake of all artists, songwriters and the wider industry, it is crucial that this new format is allowed to grow and thrive”.

“Charging artists up to four times the live rate strangles rather than nurtures this innovation. For some of the smaller artists who have just covered their costs livestreaming, it will be impossible to find this additional money retrospectively. Subsequently, we are asking that you reconsider PRS’s approach, and that you engage with us in a full and transparent consultation. This should also aim to provide certainty that PRS actually holds a mandate to license livestreaming events on a global basis”.

“Until that process is concluded”, it then adds, “we are working on the basis that the current live tariff is the applicable rate to these ticketed events. PRS wants to show global leadership, in our view this requires communication and a transparent, open and evidence-based consultation. We look forward to both in due course”.

The letter is co-signed by 50 managers who between them represent a plethora of artists including Dua Lipa, Biffy Clyro, Liam Gallagher, Bicep, Fontaines DC, Gorillaz, Yungblud and Arlo Parks. Meanwhile, FAC members putting their name to the letter include Ed O’Brien, Aluna Francis, Graeme Park, Dave Rowntree, Sandie Shaw and Simone Butler.

In an accompanying statement, MMF and FAC say that they have been engaging with PRS for two weeks since being told about the proposed rates seeking “a full and transparent consultation, but to no avail”. They then add that, therefore “we are now making our position public”

PRS has issued a statement responding to the letter. It said: “PRS For Music members, alongside many others across our sector, have been very badly impacted by the shutdown of live music this year. We welcome the many initiatives to move live concerts online and PRS For Music has designed an online live concert licence, which will allow the necessary rights to be licensed”.

“The proposed pilot licence scheme is still evolving”, it added. “As conversations with our partners are active and ongoing, it would not be right for us to provide further detail or comment at this stage while we await their assessment and feedback. Of course our primary role is to protect our members’ rights and to ensure they are paid fairly for their work, which is more important than ever now. We hope that these conversations will progress quickly”.