Written evidence submitted by PRS for Music (EXP0022)

About PRS for Music

PRS for Music is one of the world’s leading music Collective Management Organisations representing the rights of more than 160,000 songwriters, composers, and music publishers around the globe. Headquartered in the UK, it works diligently on behalf of its members to grow and protect the value of their rights. With a focus on innovation and integrity, PRS for Music is redefining the global standard for music royalties to ensure creators are paid whenever their musical compositions and songs are streamed, downloaded, broadcast, performed and played in public. With some 75 representation agreements in place globally, PRS for Music's network represents more than 30 million works and 2 million rightsholders.

In 2021, 27 trillion performances of music were reported to PRS for Music with £677.2m paid out in royalties to its members. International revenue for 2021 totalled £242.4m, an increase of 2.1% on a constant currency basis compared to 2020, with revenues continuing to be severely impacted by the pandemic.

PRS for Music’s Response

We welcome the opportunity to respond to this call for evidence. The music industry is intrinsically global and the UK repertoire is popular world over. The UK is one of only three net exporters of music in the world, alongside Sweden and the US. Access to international markets is imperative for growth: the US is the world’s largest music market, and the EU is the UK’s most valuable single market. However there are issues in certain territories that limit our ability to realise the value of that success, some of which amount to restrictions on trade and effectively limit market access.

Key Recommendations

The rectification of extant discriminatory practices and the prevention of their adoption elsewhere.
Recognition of and compliance with existing obligations under relevant international treaties: Trade-Related Aspects of Intellectual Property Rights (TRIPs) and the Berne Convention.
Agreements to facilitate easier and more affordable market access.
Reference to copyright education.
Reference to the importance of Collective Management Organisations (CMOs) to the success of the creative industries. This could also indicate the need for accountability, good governance and transparency, and endorse the principles of freedom of choice and right holders’ control.
With respect to other markets, we would support the creation of Creative Embassies in key territories, focussed on promoting access and opportunities for UK creators, whether that be providing assistance with the administrative (visas, carnets, etc.) or providing local information and access to events.

A strong global copyright framework, underpinned by clearly defined rights and effective enforcement mechanisms, is imperative to realising the international value of our world leading music industry.

The UK’s legislative framework provides a high level of protection for copyright and enforcement. While there is always room for improvement, the rigorous system in place is fundamental to the vibrancy of its creative industries. To ensure music exports are similarly successful, market penetration must be accompanied by, and can only be truly possible with, robust copyright frameworks which enable UK rights holders to extract commensurate value in other territories.

The continued endorsement of international agreements that establish the standards for protections is key to this process: requiring that countries comply with the Berne and The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is essential.[1] Where countries are not signatories, they should be encouraged to join.

The effects of differing legislative frameworks and enforcement mechanisms can be illustrated by comparing the per capita rates based on performing rights collections generated in each territory as shown in the below chart.[2]

Chart, waterfall chart

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The UK sits reasonably high up the list, behind Denmark, Sweden, Switzerland and France. When EEA territories are excluded, the UK leads, outstripping Australia, Canada and Japan, and collecting more than four times per capita than South Korea, known for the vibrancy of its music offering.

The preservation and promotion of IP should be a fundamental principle of UK trade policy. A robust copyright framework that ensures creators are appropriately remunerated for the exploitation of their work is crucial to enabling UK creators and rightsholders to export confidently.

Further detail on issues in specific territories can be found in the Territory Profiles at the end of this response.

Access to markets - Touring

The ability to travel freely, without facing administrative or financial burdens is essential to the continued vibrancy and global success of the UK’s music industry.

Post-Brexit, there are significant issues facing UK talent wishing to work in the EU, hindering the ability for bands to tour, to expand their audiences and to hone their skills. Access to the EU post-Brexit is complicated and prohibitive for many touring acts, including established ones.

In 2021, the North American market returned £242.4m to UK creators. Pre-pandemic, in 2019, the same market was worth £265.9m. It is a market with huge potential for the UK, to which access is imperative to the continued export success of UK music.

But it has also long been a difficult and costly market to access due in large part to the administrative process required to secure the necessary visas. A recent proposal by the US Department of Homeland Security would compound the issue and making access to the US market all but inaccessible for most UK creators.

The proposals recommend that petition fees for the P visa, which is issued for acts to perform temporarily in the US, would increase by 251% from $460 (£385) to $1,615 (£1,352). Meanwhile, the O visa, which is used for a longer-term working visit, would increase by 260% from $460 (£385) to $1,655 (£1,375). In addition to the visa costs, each would be accompanied by a $600 (£499) surcharge to support the US asylum process. For an industry in which much work is speculative, these are huge costs to pay up front – on top of all the other costs associated with touring and working abroad.

For a live sector still recovering from the impacts of the pandemic, this is another significant blow. This will not just directly affect the bands unable to tour, but their co-writers will see reduced royalties from live and recorded music alike.

Put simply, streamlined visa systems paired with the ability to move equipment easily across borders are vital to UK music exports.

Territory Profiles

Setting out the key financial details and some of the issues we face in realising the true value of the use of UK works in those territories.

UNITED STATES – collections per capita £5.88 (based on 2019 figures)

Local collecting societies: ASCAP, BMI, GMR, SESAC and AMRA

Royalties received from US societies in 2021: an aggregate £58.1m

Royalties distributed to US societies in 2021: an aggregate £104.9m

Musical rights income in the US, on a per capita basis, is significantly lower than in EU, in part due to discriminatory practices such as low tariff rates for online services and live performances and copyright exceptions which limit public performance licensing.
For example, the ‘Bars and Grills’ exception (‘Fairness in Music Licensing Act (1998)’), allows certain restaurants and retail outlets not to pay for the use of music. The exception runs contrary to the US’s obligations under the Berne Convention and TRIPS. The WTO found the US in breach of its trade obligations in 2000, however, the exception remains in place. A 2016 study estimated that the annual losses of the exception to UK authors as $7.5m per annum.
There is also a limitation on the licensing of music in the exhibition of motion picture films.
Rightsholders need to be able to enforce their rights. Essential to this is access to website blocking orders, which enable internet access providers to lawfully prevent their customers from accessing copyright infringing services. The UK/US FTA should expressly refer to website blocking orders as a means to protect legitimate business from unfair competition through unlicensed music services.

South Korea - collections per capita £2.91 (based on 2019 figures)

Local collecting society: KOMCA

Royalties received from KOMCA in 2021: £1.4m

Royalties distributed to KOMCA in 2021: £222k

Generally, a less robust copyright framework than is desirable.
There is an exemption in the framework that means that many businesses (cafes, bars etc) do not have to take a licence for their use of music. This is an unfair limitation on the terms of trade which limits the UK’s access to that market.
Tariffs for public performance licensing are set by the government and have been kept very low to the detriment of all rightsholders. At present, the local collecting society is not able to license cinemas for the use of foreign films, meaning UK creators miss out on revenues.
These factors are discriminatory trading practices that limit the meaningful access of UK creators and rightsholders to the South Korean market.

Vietnam - collections per capita £0.05 (based on 2019 figures)

Local collecting society: VCPMC

Royalties received from VCPMC in 2021: £48k

Royalties returned to VCPMC in 2021: £2k

Revisions have been proposed to the Vietnamese copyright framework but these do not provide better protection or more enforcement level for copyright holders against infringement. It rather proposes to introduce more exceptions and limitations on copyright.
We would ask that Vietnam be encouraged to fully meet its obligations under TRIPs and the Berne Convention including extending term of protection for composers and authors to 70 years from death.
The absence of sufficient judicial mechanisms by which UK rightsholders can enforce their rights diminishes the value of those rights and limits the meaningful access of UK creators and rightsholders to the Vietnamese market.

India- collections per capita £0.01 (based on 2019 figures)

Local collecting society: Indian Performing Right Society (IPRS)

Royalties received from IPR in 2021: £116k

Royalties distributed to IPRS in 2021: £76k

There are significant shortcomings in the Indian copyright and enforcement regime with piracy, poor licensing penetration and copyright exceptions hampering music industry revenues.
We would ask that India be encouraged to fully meet its obligations under TRIPs and the Berne Convention in particular by extending term of protection for composers and authors to 70 years from death to align with international convention.

March 2023

[2] The information is based on the CISAC (International Confederation of Societies of Authors and Composers) Collections Report and population data from the World Bank. To ensure the most complete and representative picture we have used 2019 figures. The graphic looks at a selection of territories; there are those which comprise the most valuable territories from a returns perspective, and those which are currently of interest from a trade perspective.