Written evidence submitted by PRS for Music
DCMS Select Committee Inquiry - Impact of Covid-19 on DCMS Sectors
About PRS for Music
PRS for Music is a collecting society with over 145,000 songwriter, composer and publisher members from the UK and around the world. As a membership organisation, we work to ensure that creators are paid whenever their works are streamed, downloaded, broadcast, performed and played in public.
In 2019, PRS for Music distributed £686 million to rightsholders, making us one of the most efficient societies in the world. International royalty income is the largest single revenue stream, with £278.7 million received for the use of members works around the world, which represents some 38% of our total. The biggest growth in 2019 was in online royalties, up 24% to £179 million.
PRS for Music Response
What has been the immediate impact of Covid-19 on the sector?
The impact of the Covid-19 pandemic on the music industry was swift and severe. In an industry where many are self-employed or small/micro businesses, in which incomes are made up of an array of revenue streams, the immediate closure of venues that host live music, theatres and the cancellation of festivals of all types meant that a critical source of revenue was instantly turned off. For many in the sector, this simply meant that there was no money coming in, while others were left with non-recoupable investments related to preparing for summer events and festivals. While understandably much of the discussion to date has rightly focussed on the impacts to the live sector, there have been significant problems across the whole music ecosystem. For example, the shutdown of TV and film productions has put commissions for new music on hold, some indefinitely, as the AV sector waits to see what the future holds.
In March, in partnership with the PRS for Music Members’ Fund, we established the Emergency Relief Fund to provide urgent support to members. The immediate impacts of COVID-19 on the music industry were clearly evidenced in the applications the Fund received, with many members stating they were struggling to buy food and pay basic household bills. Across two rounds of applications, the Emergency Relief Fund made grants totalling nearly £2 million to over 5000 applicants suffering hardship. The first round of the fund was intended to bridge the gap we saw between the beginning of lockdown and the commencement of government measures, but we introduced the second round when we realised a substantial proportion of our membership would not be eligible for the government schemes.
The complete shutdown of retail and leisure businesses is also having a profound impact on PRS members’ income. These businesses are heavy users of music and, therefore, are an important source of income for songwriters, composers and publishers. Licensing of public performance in 2019 returned in excess of £222.2 million, some 27% of our total revenues. The table below shows a breakdown of those royalties.
Shops and other
Pubs and clubs
Hotels and restaurants
When lockdown commenced, almost all these businesses suspended their operations and PRS, along with our partners PPL, introduced extraordinary measures to support them through this difficult time, including the suspension of outbound licence reviews and extending our existing flexible payment plan options to enable them to better spread the cost of their licence. While we hope that the decision to effectively pause licensing will help many of these business through this difficult time and ultimately assist them in re-emerging successfully as future customers, these measures inevitably have an impact on member incomes: for every week and month these businesses remain closed, royalties shrink proportionally.
All the impacts we have identified in the UK will have been replicated, to a greater or lesser extent, around the world. UK composers, songwriters and publishers rely upon income from international markets. The closure of businesses, live events, theatres and increasing commercial pressures on media companies around the world will result in a decline in UK creators’ incomes for many years to come.
How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?
PRS for Music welcomes the live communication we have had with DCMS during the crisis as they have sought to both engage and to share information with the sector. However, the Government has to-date proposed no direct support for the music industry or the creative industries as a whole. As a comparison, the Spanish Government made 780 million Euros available for their cultural and creative sectors, targeted at institutions, small businesses and individuals working in the cultural sector; the French Government announced additional funding of 50 million Euros for the National Centre for Music; the Finnish Government has provided a fund of 40 million Euros for its cultural and creative sectors; and the German Government has committed 1 billion Euros to the cultural sector, of which 150 million Euros is ringfenced for the music industry.
In place of sector specific rules, the UK Government has adopted general measures to protect jobs and businesses. While ambitious in scope and to be commended on their swiftness, the Self-Employment Income Support Scheme and the Coronavirus Job Retention Scheme did not provide adequate cover for those working in the music industry, with many falling outside the criteria due to the way their business is structured, their surpassing the historical earnings threshold or because they were too newly self-employed to qualify.
As the UK economy re-opens, there will be some businesses which will be left behind, in particular where social distancing requirements mean re-opening is not commercially viable. This includes not just the live music sector, but related sectors such as theatre, dance and ballet all of which are heavy users of music. Therefore, moving forward we would strongly urge the government to re-examine the necessity for sector specific support, including for the music industry.
What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?
The COVID-19 crisis has highlighted a general lack of understanding of the structures and economics of the cultural sector, and the interdependencies and the composite income streams of individual creators, performers and the small businesses in the sector. This lack of understanding has, in our view, presented in barriers to the public sector designing and ultimately implementing specific measures to support the cultural sectors.
Some within the sector have raised concerns about the way the Arts Council administers its funding to the music industry. The decision by the Arts Council to provide emergency funding only to recognised institutions, in many cases only those previously in receipt of funding, has limited their ability to provide focused responses to areas of the sector most in need. It is essential that moving forward the Arts Council look at how it can provide more dynamic and targeted support and how grants made to large institutions can be used to stimulate the sector more broadly.
How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?
As is the case for many sectors, Covid-19 has accelerated the adoption and acculturation of digital services, well-evidenced in the proliferation of live streaming of performances in the last few months (previously a rarity in the music industry). The transition from physical to online is not new for our sector: 22% percent of our members’ royalties in 2019 were generated on online services.
Covid-19 has underscored the dominance of the large online platforms and the ever-increasing importance of the online market for creative content. Copyright is the primary mechanism by which creators derive value from their work. The ability to protect and monetise those rights has been, and will continue to be, essential to the success of the industry. Therefore, we would urge the DCMS and the IPO to look closely at the existing copyright regime and to consider how it might be used a tool to both reinvigorate the music sector and build future growth. This should include ensuring that where music is used online, for instance via social media platforms, it can be properly licensed by rightsholders and that there are adequate measures to combat copyright infringement, an area that has seen a significant resurgence during the pandemic.
We would also urge the government and other public sector bodies to take a long-term view when implementing measures to restart the creative industries and ensure that any intervention serves not only short-term reinvigoration but also to enhance sustainability and future growth. For example, the classical music sector has been severely impacted by the COVID-19 lockdown: more than other sectors it is heavily dependent on live income and the fees paid for new commissions. Decisions on future government funding for venues and individual companies, particularly in opera, ballet and theatre, should include conditions which encourage both the commissioning and use of classical works.
The same principles should be applied to the audio-visual sector, video games, television and films, all of which are significant users of music and commissioners of new works. It is imperative these sectors continue to invest in the wider UK creative market in a long-term, meaningful way. This must include deescalating detrimental practices such as the ‘buying out’ of rights, where the composer of a work(s) is required to assign some or all of their rights to the production company. While such measures are sometimes perceived by producers as creating savings, such practices have a permanently deleterious effect on the music industry in the longer term.
A final point on the future and Brexit
The COVID19 pandemic has highlighted the interconnectivity of the music industry with the wider economy. The existent economic impacts of COVID19 risk being exacerbated by a Brexit which does not give due consideration to the UK’s creative sectors.
The lockdown had shown the essential role which live music plays to the music ecosystem. Barriers to touring across the EU will have a profoundly negative impact on the UK music industry and disincentives for creators from outside the UK to come here on tour will put additional pressure on live venues, which are already suffering. Brexit will also see UK creators and creative organisations lose access to EU financing programmes, therefore making available alternative funding will be crucial to safeguarding the vibrancy of the sector.
As the Committee considers how to assure the recovery of the UK music and creative industries, consideration should be given to the future relationship with the EU and the opportunities arising from trade agreements with the US and other territories.
 PRS for Music’s public performance licensing is carried out on PRS for Music’s behalf by PPL PRS Ltd, the joint venture between PPL and PRS for Music.
 According to a UKIE report the overall percentage of infringing download sites has increased since the COVID-19 outbreak, while in the UK the traffic was increased by 5% and by 2% on sites where data was available. The IPO has worked with the Creative Industries Policy and Evidence Centre and AudienceNet on research which highlights the need for protection of works in the online environment. Among the findings, it was observed that music was the category of content illegally downloaded by the highest proportion of consumers. This has fluctuated across the weeks – peaking in week 1 at 33% and ending currently in week 6 at 28%.