Music Licensing - Consultation on Exemptions 

In June 08 theUK Intellectual Property Office (UK-IPO) consulted on the proposed changes to the exemptions from public performance rights in sound recordings and performers' rights contained within the Copyright Designs and Patents Act 1988.

Background

Copyright exists in original music work so that when a recording of music is played in public, such as records, tapes, CDs etc the PRS has authority to collect royalty payments on behalf of composers, songwriters, authors and publishers for the copyright in live performances and sound recordings.  Copyright also exists in the sound recording so that the maker of the sound recordings (eg. record companies) are entitled to copyright protection and the PPL has authority to collect these royalty payments.  Under the current system clubs may therefore be required to hold both a PRS Licence and a PPL Licence if live performances and/or sound recordings are played.

Consultation

The UK Intellectual Property Office consulted on the proposed changes to the exemptions from public performance rights in sound recordings and performers' rights contained within the Copyright Designs and Patents Act 1988.

The consultation was primarily focused on the requirement for charitable and not-for-profit organisations to pay royalties for playing recorded and broadcast music.

Current Exemptions

Currently S.67 of the Act exempts clubs, societies or other organisations that are not established or conducted for profit whose main objects are charitable or are otherwise concerned with the advancement of religion, education or social welfare and the proceeds of any charge for admission to the place where the recording is heard are applied solely for the purpose of the organisation, from the requirement to obtain a PPL for the playing of sound recordings. The RYA considers it debatable as to whether boating clubs would qualify under the S.67 exemption, the difficulty being the ability to demonstrate a charitable or social welfare purpose. 

S.72 of the Act exempts not-for-profit bodies from holding a PPL licence where they play radios or TVs if the broadcasts include music and the audience have not been charged entry.

The PPL arguthat its members are entitled to payment from organisations that are currently exempt.  If the PPL's arguments are successful this would mean that clubs that are currently exempt from having to obtain a PPL licence would in future be required to obtain one (see option 1).

Consultation Proposals

The consultation submits three alternative proposals to the current arrangements:

• Option 1 - rescind the PPL exemptions;
• Option 2 - narrow the scope of the PPL exemption so that they are only available to small charities (that is charities with an annual turnover of less than £20,000) whilst at the same time extend the PPL exemption to PRS; or
• Option 3 - remove the PPL exemptions but impose royalty rates which are considered fair to both producers/performers and users, referred to as 'equitable remuneration'.

The average cost of a PRS licence is £370 and it is estimated in the consultation that the cost of a PPL licence would be between £104 and £164 which would place another unwanted financial burden on clubs. 

The proposed Option 2 would have the effect of narrowing the scope of the S.67 and S.72 exemptions so that they only apply to small charities (i.e. charities with an annual turnover of less than £20,000).  We believe it is essential to obtain confirmation from the UK Intellectual Property Office that there is no requirement for the charity to be registered and that the definition of charity is as contained in the Charities Act 2006 and as such includes the advancement of amateur sport.  We would seek to ensure that Option 2 applied to all community sports clubs whether or not they are registered as CASCs or charities. 

If Option 2 is successful, the suggested turnover threshold of under £20,000 could have a huge impact on clubs that have an annual turnover of £20,000 and over as they would be required to go to the expense of obtaining both a PRS and a PPL licence.

The proposals will affect clubs in England, Wales, Scotland and Northern Ireland. 

You can obtain a copy of the consultation by visiting the UK Intellectual Property Office website at www.ipo.gov.uk or by contact Emma Karidian by telephone on: 01633 813834 or by email: musiclicensingreview@ipo.gov.uk.  

The consultation closed on 31st October 2008.

The Government will use the responses to the consultation to identify the option which best achieves the correct balance between the interests of rights holder and users.  The outcome of this consultation may therefore have financial implications for clubs and we would therefore urge all clubs that play recorded and/or broadcast music at their clubhouse to respond to this important consultation in an effort to try and salvage the current PPL exemption and seek to extend the exemption to PRS licenses for the benefit of not-for-profit clubs, which in our view should not be limited to charitable organisations but be open to community sports clubs whether or not they are registered as CASCs or charities.

The UK-IPO is intending to hold a series of meetings later this year to discuss the proposals put forward in the consultation.  e-mail musiclicensingreview@ipo.gov.uk to receive more information on the proposed meetings.

Government's Response to Consultation

Many of you responded to the Consultation but despite sport raising concerns over the financial and administrative burden involved in obtaining these licenses, Government has responded to the Consultation and unsurprisingly the outcome isn’t great for sport! 

Government has decided that it will revoke the current PPL exemption (Option 1), meaning that sports clubs using music will have to obtain both a PRS and PPL licence.  This news means yet another administrative and financial burden for clubs. 

The response does indicate that PPL and PRS have agreed:

• that PPL will not charge for certain uses of music e.g. domestic/family occasions such as weddings, music as part of divine worship, residential homes/hospices, hospital wards, medical therapy;
• that PPL will undertake a joint consultation with the Community Sector Law Monitoring Group to agree affordable tariffs based on relevant criteria; 
• that PPL and PRS will run a new joint and simplified licensing system;
• that PPL will offer blanket licences for occasional but varied use of community/rural halls as PRS operate currently; and
• that PPL will develop a code of conduct linked to an independent complaints reviewer (along the lines of the code proposed by PRS in July 2009).

Government’s response to the Consultation can be downloaded from http://www.ipo.gov.uk/govresponse-musiclicensing.pdf

November 2010 Update

The Government has laid the Statutory Instrument (No.2694) that repeals the exemptions will come into force on 1st January 2011.  However, the PPL licences will not be introduced until January 2012 and therefore clubs that use music will require both a PRS and a PPL Licence from 2012.

We are working alongside the CCPR to try to achieve a satisfactory tariff for sports clubs.

For further information kindly contact the Legal Department: Tel: 0845 345 0373 or email: legal@rya.org.uk