Copyright Chaos 3: Music Licensing for Retailers – the Government Responds

HER MAJESTY’S GOVERNMENT have now responded to the Open Letter to the Rt Hon Dr Vince Cable MP about music licensing issues posted here at the end of June on behalf of thirteen Christian retailers.

Music Copyright Licensing: The IPO Responds

Music Copyright Licensing: The IPO Responds (pdf, 250kb)

The response — issued by the Intellectual Property Office (IPO) rather than by Dr Cable himself — outlines the current state of the law around music copyright issues, which essentially corresponds to Luke Hughes-Bunger’s outline of the problems faced by retailers in his post Copyright Chaos: Are Current Copyright Regulations Killing Christian Music? In short, the two agencies, Phonographic Performance Limited (PPL) and PRS for Music (PRS), exist to collect licence fees on behalf of their members to ensure that whenever music is played in a non-domestic environment, such as a shop, the music producers receive due payment  — and that “includes the playing of CDs for demonstration purposes”.

The letter goes on to explain the status of PPL and PRS as “privately-run commercial organisations” essentially operating on a self-regulatory basis without specific government controls:

Collecting societies such as PRS and PPL are privately-run commercial organisations. They are not government agencies. While they are subject to the general company law framework that applies to other companies of the same legal form, their collecting society functions are not specifically regulated by government. Where copyright law applies, it is for collecting societies themselves, with the agreement of their members, to decide whether or not to seek a licence. The legislation gives them a discretion to licence copyright works, the government has no control over whether they do.

The response is helpful insofar as it outlines and provides links to a number of concessions made available by PPL and PRS to small businesses, but it fails to address the two critical issues raised:

1. That as things currently stand, no distinction is made between performance for entertainment purposes and promotional playing for sales purposes. Books, pictures and other products may all be freely displayed and/or handled in shops without any sort of licensing requirement but it appears that the music licensing agencies are unable or unwilling to recognise fair usage even when that usage is specifically made to sell the product: payment is demanded not only when the product is sold but also when it is displayed, giving musicians and their producers a double royalty as both the retailer selling the product and the end consumer are required to pay. This is, at best, an unfair practice.

2. That even given the concessions, licences remain prohibitively expensive, requiring retailers to sell up to 20 CDs each month just to cover the cost of the licences themselves. The music industry is cutting off its nose to spite its face when it has absolutely no need to do so: PPL and PRS are at liberty to offer retailers promotional licences on a low or even no-cost basis, a policy which would not only help to boost sales of their own members’ products but would also help to revitalise the high street as retailers would be able to promote music product as freely as they are able to promote all other products.

The simple fact is that self-regulating industry only truly works when it is to the benefit of that industry; in cases such as this, where the agencies concerned are operating in a way that is clearly detrimental to their own members and to the nation’s high streets, a more pro-active stance by government is called for.

I therefore reiterate the call in the original letter to Dr Cable to take urgent action over this matter before it is too late and even more shops are driven out of business to the further dereliction of our towns and cities: merely restating the way things are does not address the problems that retailers face.

Adapted from my reply to the IPO’s letter.

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