NOTES FROM RADIO FESTIVAL
2008 JOINT PRESENTATION BY
PPL AND MCPS-PRS ALLIANCE
ON COMMERCIAL RADIO MUSIC
COPYRIGHT AGREEME...
'WHO PAYS THE DIGITAL PIPER? – THE ISSUES'
The Radio Festival, 1 Jul 2008 @ 1130
Peter Leathem, Director of Legal & Busine...
AS: “The current arrangements that are in place between PRS and the
independent radio industry hark back to a pre-digital ...
PL: “Whatever was going on around the so-called promotional activity was
happening in 1993, that was factored into the pri...
PL: “…we are looking all the time to make sure that we have this level playing
field and that everybody is working togethe...
AS: “If you look around Europe at the major markets of France, Germany, Italy,
Spain and even the Netherlands, the rates f...
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'Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements' by Grant Goddard

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Notes from a joint presentation at the Radio Festival by PPL and The MCPS-PRS Alliance about the UK commercial radio sector's music copyright agreements and royalty payments, written by Grant Goddard in July 2008.

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'Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements' by Grant Goddard

  1. 1. NOTES FROM RADIO FESTIVAL 2008 JOINT PRESENTATION BY PPL AND MCPS-PRS ALLIANCE ON COMMERCIAL RADIO MUSIC COPYRIGHT AGREEMENTS by GRANT GODDARD www.grantgoddard.co.uk July 2008
  2. 2. 'WHO PAYS THE DIGITAL PIPER? – THE ISSUES' The Radio Festival, 1 Jul 2008 @ 1130 Peter Leathem, Director of Legal & Business Affairs & Rights Negotiation, PPL/VPL Andrew Shaw, Managing Director, Broadcast & Online, MCPS-PRS Alliance Many important issues arose from this PPL/PRS session: 1. Commercial radio’s music usage PL: “…..about 70% of your output, that being the music.” 2. Requests for new media rights exploitation PL: “….surprise over recent years around having to clear certain rights for new media services…..” PL: “…the rights owners don’t see all the areas that broadcasters are getting into as ‘radio’.” PL: “….in the new media area, you’re not just competing with each other and the BBC, but also the likes of Napster, Yahoo!, Last.fm and so on, all of whom are prepared to pay for music in their services.” AS: “…the radio industry is moving more and more into the multimedia space.” 3. Comparison with commercial TV PL: “….commercial TV, who are much more used to rights clearance on a dayto-day basis….” PL: “…commercial TV and the BBC have pushed the boundaries and experimented a lot more than commercial radio.” 4. The BBC/PPL Agreement PL: “…..we were able to deliver most of the new rights that the BBC wanted.” PL: “….the terms took a bit of thrashing out, but ultimately everything was sorted out by agreement.” PL: “….we have been reviewing things with commercial TV, with the BBC, and we have managed through sensible detailed dialogue to get to a position where we both understand where we are coming from, both understand our requirements, and have sorted things out by agreement.” 5. The 1993 Copyright Tribunal is outdated PL: “….the Copyright Tribunal that commercial radio operates under today is 15 years old now and was made in relation to the business models of the then 79 commercial radio stations.” PL: “When you go back to the 79 stations that effectively had a regulated monopoly, a certain outlet of distributing music in that way.” PL: “…because if you go back to looking at some of the comments that have been made today about the use of music on radio as all promotional, what I’m trying to point out is that we are in a very different world now.” AS: “CONVERGENCE, NEW TECHNOLOGY and DIGITAL. They all mean that things are no longer quite what they used to seem.” Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements Page 2 ©2008 Grant Goddard
  3. 3. AS: “The current arrangements that are in place between PRS and the independent radio industry hark back to a pre-digital age…” 6. Commercial radio’s business model is more complex than 1993 PL: “We have around 330 commercial stations in the UK now and the revenue generated is a bit more complex than the old advertising and sponsorship model catered for in the Tribunal decision.” PL: “…something that was put in place for a very different business model for 79 stations 15 years ago is something that needs to be reviewed.” 7. ‘Radio’ is merely ‘distribution’ of music PL: “In a world where any use of music is, in reality, distribution….” PL: “Nowadays, there are so many opportunities for the music to be consumed that, in effect, there is the opportunity for everything to then become ‘consumption’.” PL: “If you’re listening in digital quality, if you’re listening in a way that is pretty much what you want to do, for example, if you are using the Last.fm or Yahoo!type services where you are just actually informing which sort of artists you like and which you don’t like and you are tailor-making your listening, it’s getting very much towards that sort of distribution, where why would you need to purchase anything?” PL: “…that is going to be one of the areas that we are going to collectively need to look at to understand what the impact is going to be…” AS: “…I think the definition of ‘radio’ is also changing.” 8. Monetisation of radio listening PL: “….commercial radio finds it annoying when it is criticised for not monetising its enormous listener base properly…” 9. Commercial radio now offers ‘niche’ formats PL: “…as you have more and more channels, and more and more niche channels, the opportunity for the listener to actually consume what they want is there in a way that it wasn’t there 15 years ago.” AS: “…with that comes a level of fragmentation that would have been unthinkable 15 years ago.” 10. Radio airplay substitutes music sales PL: “…when you get so many outlets for listening to music in a niche way, is that in fact becoming substitutional?” PL: “When you look at the sales of records over the years, there was no sales spike when commercial radio launched.” PL: “I think that it’s something we need to look at to see what is happening and what is the impact and how does that impact on the [rights] pricing.” 11. Radio airplay is free promotion of music PL: “…in terms of what promotion is and what that is doing about selecting one artist rather than another, whatever was going on back in 1993 is very different today.” PL: “That needs to be looked at as part of our discussions to see what is the impact and what does that mean in terms of the actual payment mechanism?” Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements Page 3 ©2008 Grant Goddard
  4. 4. PL: “Whatever was going on around the so-called promotional activity was happening in 1993, that was factored into the price that was determined by the Copyright Tribunal.” PL: “We need to see what has been happening over the last 15 years and where we are.” 12. Offline/online rights rolled into a single Agreement AS: “We would like to deliver you the rights that you need to offer an almost seamless use of music across a range of platforms.” AS: “…we want to work with all in the industry and industry stakeholders to come up with a licensing framework that has consistent principles across the different distribution platforms…” AS: “…whether or not those two have to remain completely separate licensing schemes going forwards, I very much doubt.” AS: “…if they are two separate schemes, they need to be consistent with each other to remove those sorts of anomalies but ensure that the royalties are paid in a fair way…” 13. PPL/PRS rights rolled into a single Agreement PL: “If you go back to the Tribunal decision of 15 years ago, effectively the same model applies to the both of us. Not a lot has really happened to change that model in the last 15 years, so we haven’t really had to talk. I think that one of the things that we will have to explore as we go forward and talk with the RadioCentre is ‘what is the interplay between the two organisations?’ and ‘how do we take things forward?’ I think probably, being sensible, we should all be talking together really.” AS: “One of the things that came out of this Tribunal decision 15 years ago was that both we and PPL have schemes that, on a practical level, operate in very similar ways, and that was at the request of the industry. So, to the extent that we want to continue that, we all need to talk together.” 14. Level playing field with BBC Agreement AS: “For us, they pay on a comparable basis. Obviously, they have a different charging mechanism because the BBC doesn’t have revenue, so you have a way of charging them, but basically we are under an obligation to make sure that we have a level playing field, so I can confirm that they pay on a level footing.” PL: “That’s exactly the same for us.” 15. Pricing of rights PL: “…where the difference of opinion comes, is about the pricing or the terms that you apply to what is going on.” 16. ‘Fairness’ of schemes PL: ”What we actually want to do is to actually have fair schemes, things that work fairly.” PL: “. We definitely see our job as maintaining a level playing field and making sure that all these services are properly licensed.” Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements Page 4 ©2008 Grant Goddard
  5. 5. PL: “…we are looking all the time to make sure that we have this level playing field and that everybody is working together to make sure there is a fair payment.” 17. Replacing ‘revenue’ with ‘usage’ for commercial radio rights PL: “…going forward with commercial radio, we are going to have to look at things like the way in which radio is charged for.” PL: “…as we move into the online environment, we have had three pretty important decisions on that – two in the US and one in the UK – which are saying that really the only sensible way of licensing online is a consumption model.” PL: “It is very difficult to be charging a percentage of revenue when there are lots of other things going on.” PL: “The basic percentage of revenue in the 1993 decision was on the assumption that people are trying to maximise their revenue, and there was a sufficient nexus between the revenue and the charging.” PL: “If, say, the consumption model is the right thing for online, how then does that fit with the traditional model of licensing?” 18. ‘Linear’ versus ‘non-linear’ radio AS: “We are moving from that technology and geography into an area really only being able to differentiate meaningfully between linear and non-linear.” AS: “Any form of content that goes from creator to screen in a linear form, irrespective of how it gets from A to B, theoretically should be licensed in a similar way.” 19. Removing anomalies caused by Copyright Tribunal decisions AS: “There are a whole load of precedents that have been set in the multimedia space and set down by Copyright Tribunals – so it’s not for us to … and we don’t have the ability to change that – and because they have come from different starting points, it has created some anomalous situations in certain areas, and we have got to work out how to deal with that.” AS: “Radio has come from the area we all know and is licensed in the percentage of revenue way, whereas anything that is on the internet by definition has to come under the Tribunal-defined scheme.” AS: “…when a decision comes out, it is actually binding but not necessarily our choice to have gone there in the first place.” 20. Opportunity offered by 2009 review of online Tribunal decision AS: “…. With respect to the current online Tribunal, it made an unprecedented move of time-limiting the period during which the decision was applicable, until the middle of next year, so whereas with radio we have a decision that we are all living with now that was made 15 years ago, the online decision will come up for review next year, and that’s when we all have an opportunity to do something that is much more workable for the new world.” 21. Comparisons with foreign territories AS: “…if you aggregate the performing rights that are payable to the three different societies [in the US], they do add up to a proportion of revenue that is not a million miles from what we charge.” Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements Page 5 ©2008 Grant Goddard
  6. 6. AS: “If you look around Europe at the major markets of France, Germany, Italy, Spain and even the Netherlands, the rates for the performing and mechanical rights are significantly greater, right up to 13% of revenue in the case of the Netherlands. So I don’t think you actually are paying more.” PL: “…I think there are actually quite a number of things going on there [in the US], and actually the rates aren’t necessarily lower than they are here.” Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk Notes From Radio Festival 2008 Joint Presentation By PPL And MCPS-PRS Alliance On Commercial Radio Music Copyright Agreements Page 6 ©2008 Grant Goddard

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