Supplementary written evidence submitted
by PRS for Music
Response to evidence of representatives of RadioCentre
on 27th October 2009 concerning the Future for Local and Regional
Media.
PRS for Music has been requested to comment
on certain assertions made by RadioCentre, namely:
— That the licence fee for radios in the
workplace is effectively a double taxation.
— The licensing demands made by PRS (and
PPL) on workplaces are aggressive.
— The licence fees on radios in the workplace
is leading to a decline in listenership and jeopardising local
radio stations.
— There is confusion amongst licence fee
payers who sometimes, wrongly, assume it is the radio station
demanding the fee.
PRS for Music does not agree that these
assertions are fair or, indeed, factual. We have commented on
all these issues below, with our responses split into two sections.
Section 1 gives an outline of PRS for Music's activities
and licensing practices. Section 2 deals with the particular questions
concerning the interplay between the licensing of music played
in the workplace and radio audiences.
Should any members of the Committee have any
further questions or require any additional information, we will,
of course, be happy to provide whatever is required. In addition,
we would like to extend an open invitation to Committee members
and any relevant representative bodies who would like to come
to visit one of our call centres and find out more about the reality
of our licensing operations. As described below, Andrew Harrison
of RadioCentre has undertaken such a visit and we believe he will
able to confirm our professional and informative approach to customers.
In summary our position is that:
— The licensing of music played in the
workplace is a valid and important role, which we carry out on
behalf of the 60,000 songwriters, composers and music publishers
we represent, given the proven benefits that the use of music
brings to the workplace.
— Our licensing practices are professional
and most certainly not aggressive in any way. We are sincerely
committed to good conduct, as demonstrated over the last year,
with campaigns to increase awareness of what we do and the launch
of our Code of Practice.
— We have been licensing music in workplaces
for many years and we have endeavoured always to reach an appropriate
balance between the interests of our creator members who depend
on royalties for their livelihood and the interests of our customers,
especially small businesses.
— We are aware of no evidence whatsoever
that indicates any link between our licensing of workplaces and
the decline of commercial radio revenues.
In support of our submission we attach the following:
Appendix A—a typical letter to a potential
customer[138]
Appendix B—our Code of Practice[139]
SECTION 1: PRS
FOR MUSIC'S
LICENSING ACTIVITIES
1.1 The licensing process
We were most concerned about the accusations
made towards PRS for Music regarding our conduct and aggressive
licensing demands and do not consider that these comments give
a fair or accurate representation of our approach to licensing.
Unfortunately many of these concerns have been
based on a lack of awareness or a mis-perception of our activities.
We have worked hard to increase general awareness and, as a result,
many businesses have a much better level of understanding when
we contact them by phone or letter.
Before we call any business, as part of a licensing
campaign, we always send a letter. Our letters explain clearly
who we are, whom we represent and the licensing requirement. A
typical licensing letter to prospective customers is attached
as Appendix A.
Not only does this letter specify the appropriate
factual information but it also encourages business to introduce
music and highlights the benefits of using music. In this way,
it's just as likely that we are helping to grow audiences for
music.
We may follow up the letter with a telephone
call to businesses to establish whether they are using our copyright
music, by what means and to what extent. All individuals who undertake
such calls on our behalf are rigorously trained and every call
we make is recorded and logged. Calls are proactively monitored
and scored based on the quality of the call. Any issues arising
from this monitoring or from customer complaints or feedback are
addressed quickly and thoroughly.
1.2 Our Code of Practice
To demonstrate our sincere commitment to good
conduct, we introduced a customer Code of Practice in July this
year (a copy is provided in Appendix B) and became the first copyright
licensing body in the UK to introduce an independent Ombudsman
scheme to handle complaints which we are not able to resolve.
So far, the Ombudsman has not taken a single complaint case. The
Code is also available on our website at www.prsformusic.com/codeofpractice.
Comments at the Committee hearing alluded to
a high volume of complaints and businesses that choose to turn
off music, rather than obtain a licence. The facts appear to contradict
these accusations.
We only receive a relatively small number of
complaints and these complaints have significantly reduced following
process improvements made last year. Complaints have reduced by
more than half in 2009 (compared to 2008), and are currently are
at a rate of just 1 per 5000 customer contacts.
1.3 Recognition of our customer service
Our approach seems to be working. In 2009, PRS
for Music was a regional finalist for a National Business
Award for Customer Focus.
And we're continuing to enhance the quality
of our service — listening to customer feedback and improving
our tariffs and processes.
1.4 Licensing music in workplaces
There's no doubt that workplaces require a licence
for public performance, if they choose to play copyright music,
for the benefit of staff or customers.
The legal precedence for workplace licensing
was established back in the 1940s, confirming that a licence for
public performance is required if music is played in a workplace
(Ernest Turner Electrical Instruments Ltd v PRS and PRS
v Gillette Industries Ltd, 1943). The Copyright, Designs and
Patents Acts 1988 is clear that a licence is required regardless
of the means of performance, whether live music, recorded music,
internet or via TV and radio broadcasts.
We have been licensing music use in the workplace
for decades, charging a fee in return for our licence, which allows
our customers to use millions of pieces of music from the UK and
around the world. This is not only vital to support the creators
of music; it is fair that they should be paid for their contribution
to businesses. Studies show that music in the workplace increases
productivity and morale.
When good music is played:
I 74% of employees say they like going to work
more
I 1 in 3 employees are less likely to take time
off sick
I 77% of staff say they are more productive
I 82% say staff morale improves
From MusicWorks survey of 2,000 people
March 2009
We have more than 40,000 workplaces licensed
in the UK — mainly office and factories. Many of the other
340,000 premises we license will also include staff-only areas.
1.5 Reduced rates for small workplaces
PRS for Music represents 60,000 music
writers and publishers — most of whom are individuals and
small businesses and many rely on their income from royalties.
That's why we make sure that 90% of the money we collect goes
straight back to our members (we only deduct costs). And we want
to make sure we address the needs of small businesses—whether
our members or our customers. It's important to us that we get
the balance right—protecting our members' ability to make
a living, while ensuring that businesses can get all the benefits
of using music at a reasonable price.
Of course, bills are generally not popular with
businesses and we appreciate the significant burden that businesses
face from bureaucracy and administration. We are very supportive
of reducing administration for our members and other small businesses.
Keith Gilbert, the Managing Director of Public Performance Sales,
is actively involved with the Genesis Initiative and PRS for
Music is sponsoring the all-party manifesto for small businesses.
As well as working closely with trade bodies
to raise awareness, such as the Federation of Small Businesses
(FSB) and regional Chambers of Commerce, we have also carefully
considered the circumstances which we license and the charge we
make for our licence.
In certain circumstances, we assess that no
licence fee is payable (e.g. home offices and where employees
use personal devices with headphones). Earlier this year, working
with the FSB, we halved our charges for small workplaces (with
four workers or less). Small workplaces can get a licence for
only £44 + VAT per annum—less than £1 a week.
This change has been well received by small businesses.
"Playing music in the workplace can help
boost staff morale and the FSB is pleased that PRS for Music has
put in place an affordable way for small business owners to enhance
the working environment for their staff."
John Wright, National Chairman of the FSB (Jan
09)
SECTION 2: ISSUES
RELATING TO
RADIO
2.1 Is the requirement for workplaces to obtain
a licence from PRS for Music a case of "double taxation"?
Firstly, it is important to clarify that copyright
licensing is not related to taxation. The royalties PRS for
Music collects on behalf of its 60,000 members directly represents
their income, in many cases vital income. The use of the term
"taxation" undermines the value and purpose of copyright
legislation, which exists to protect the rights of creators to
earn a living from their work.
Secondly, there is certainly no "double-charging"
when we license workplaces for the use of music, made by any means
including radios. Copyright is a bundle of rights including copying,
communication to the public (broadcast) and public performance.
These rights are usually licensed separately, with a separate
licence fee. To suggest there is "double-charging" undermines
the entire basis of the bundle of rights defined in the statutory
framework.
It is usually fairer that music users pay only
for the specific uses they want to make of music. If, for example,
CDs were bought, with the right to make copies of that CD or make
a public performance using the CD, the charge for all CDs would
have to be significantly higher.
The licences issued to TV and radio broadcasters
and, indeed, to the CD manufacturers and online music retailers
do not include the right to make a public performance of that
music.
TV and radio broadcasters are aware of the value
of copyright, as copyright holders themselves. In the same way
that our writer and publisher members ask for payment for different
types of use, TV and radio broadcasters do not allow members of
the public to use their material which has been publicly broadcast
for any other purpose, without additional permission from the
broadcaster. In fact, many broadcasters will take action to stop
members of the public creating copies of their content or posting
the content on sites such as YouTube.
2.2 Is the requirement for workplaces to obtain
a PRS for Music licence causing radio audiences to decline?
There appear to be many reasons why commercial
radio audiences have declined but we are not aware of any data
or analysis that suggested that workplace public performance licences
are an issue. Indeed, we have not found any published research
on declining radio audiences which cites our licences as a factor.
Radio audiences have declined since the turn of the century, particularly
amongst younger age groups. Music consumption has shifted to different
platforms, most notably iPods and MP3 players. It also appears
that commercial radio has lost listeners to BBC stations.
As we have said before, we have been licensing
workplaces for many decades and this will include premises which
play the radio. Through that time commercial radio — both
national and local — has been developed and blossomed into
a large and successful business. None of that growth was hindered
by PRS for Music licensing of workplaces.
Our data shows that, of the 820,000 businesses
we have contacted so far this year, less than 600 workplaces told
us they would rather stop playing music than pay for a licence.
Around 50% of workplaces tell us they are playing radio. Consequently
even if one accepted that premises may cease to use music via
radio and that could be picked up in RAJAR figures, the numbers
(extrapolated from this proportion) would be so small as to have
minimal effect.
2.3 Is there confusion amongst licence payers
who assume it is the radio station demanding the fee?
You asked us to comment on whether there is
any confusion amongst music users, who might assume that the radio
station is "demanding the fee". We've not heard of any
customers raising this issue to us and there's no reference to
radio broadcasters in our customer literature. All our letters
make it clear that the money collected is distributed to our members—music
writers and publishers (see the information on the back of the
licensing campaign letter attached). We also provide information
to any customers who have queries about what different PRS
for Music licences cover.
3. OUR RELATIONSHIP
WITH RADIO
BROADCASTERS
We are aware of the difficulties currently facing
the radio industry. Indeed the challenges posed to the radio industry
by the ever-changing internet landscape is one with which we have
much empathy. Further, as the licence fees paid to PRS for
Music by radio broadcasters are based on audience figures
and advertising income, we obviously want to support this sector
wherever possible. Consequently we are keen to further plans with
the radio sector to jointly promote the value of music in the
workplace.
We are keen to ensure that our tariffs do not
present a barrier to businesses who want to use music and if the
radio sector can provide evidence which illustrates that there
is a real impact, it would be in our own interests to consider
the information.
We also wish to ensure that there are no misunderstandings
about our operational activities. Last week, Andrew Harrison visited
one of our customer call centres and we were pleased to provide
full details of our processes and quality monitoring (this meeting
had been arranged for some time and prior to the Committee meeting).
Andrew was also invited to listen to live telephone calls made
to businesses. We are confident that Andrew will be able to confirm
the professionalism and quality of our operations. We were also
able to identify ways in which PRS for Music can work with
the radio sector to increase music use and radio audiences and
we look forward to progressing these plans.
November 2009
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139
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