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Song publishing collecting societies restructure partnership

By | Published on Thursday 18 April 2013

PRS For Music

Following weeks of speculation about the future of the relationship between the UK’s two music publishing rights collecting societies, PRS and MCPS today announced a restructuring of their partnership.

Copyright owners enjoy various exclusive rights over the works they own, though the two most important are probably the right to make copies of a work and the right to perform those works in public. If anyone else wants to do either of those things, they need the copyright owner’s permission.

Music publishers, who own or administrate the copyrights in lyrics and musical score, generally grant that permission – for a fee, obviously – through the collective licensing system, utilising their collecting societies. Traditionally separate societies existed to service those who wanted to make mechanical copies of a song (ie to release recordings of said song, so usually labels) and those who wanted to perform a song in public (either live or by playing a recording). In the UK those societies were MCPS and PRS respectively. This split, which is also found in many other territories, has caused some interesting challenges in the streaming space, where both mechanical copies and performances take place at the same time.

Though in the UK MCPS and PRS – who, after all, have a lot of members in common in terms of rights owners – have had an alliance since 1997, working closely together and offering joint licences in the online domain where both copying and performing take place. That alliance was stepped up in 2009 with the launch of a new brand, PRS For Music, so that to the outside world there was one organisation in the UK representing the copyrights that exist in songs, even though behind the scenes MCPS and PRS remained separate institutions.

Quite how that partnership works has been up for review of late, mainly because of shifts in the way song rights make money, with mechanical rights income hit by the slump in record sales while performing right revenues go up. It means that MCPS’s finances have not been looking so healthy, and rumour has it that has caused particular problems regarding pension contributions.

While the specifics of MCPS’s financial situation, and any knock-on effects it is having on PRS, are not especially clear, this morning some significant changes in the partnership between the two organisations were announced. Crucially, MCPS will sell its stake in the PRS For Music operating company to PRS, and then, at the same time, engage the services of that company to manage its members’ mechanical rights, so that MCPS becomes a customer of the PRS business, rather than a co-owner.

Those execs at PRS HQ who focus on mechanical rights already work for PRS For Music, rather than MCPS direct, so the change shouldn’t affect them too much, and licensees who rely on combined mechanical/performing rights licences shouldn’t notice any differences either, as the PRS For Music company will continue to administrate both elements of song rights.

Confirming the changes, PRS For Music said in a statement that the move had been caused because “MCPS faced significant market pressures as the consumer market moved from CDs and DVDs to downloads and streaming” and that the restructure would “allow the business to operate more efficiently”. As part of the agreement between the boards of MCPS and PRS “both societies commit to further reduce costs, enabling more efficient operations”.

Commenting for PRS, the society’s Chair Guy Fletcher told CMU: “With this deal we will continue to act in the interests of all of our members, ensuring the business manages its costs appropriately and delivers stability of royalty income in an ever changing world”.

Meanwhile MCPS Chair Peter Cornish added: “Despite collecting royalties of almost £176 million for MCPS in 2012, we have been unable to reduce costs as quickly as we’d like with our current structure. Contracting with PRS will allow us to become more efficient and continue to serve the needs of members”.