UK Music royalties for commercial radio stations

The way in which both PRS and PPL administer royalty payments is long established.  For clarity it is absolutely correct that publishers and artists should be rewarded for their creative work by broadcasters using their product to attract audiences.

Beyond the above there is an emerging issue, and one that if handled sensibly will not only help new small scale stations to flourish but also potentially mean significant increases in royalty revenues.  What some would say is not an option is to apply the current system and tariffs to the new small scale stations.  A review is overdue, and this should also be extended to independent DAB stations.

The problem emerges as a result of radio’s evolution.  The economics of a local station are very different to where they were when the current system was introduced.  Back then many local stations had monopolies in their areas, revenues were often high.  The same local licences continue to thrive albeit most of them are now part of national networks.

If nothing changes the new services will struggle to meet royalty obligations, and ultimately could fail – that’s bad for royalties and the stations alike.  Indeed it’s not good for the entire concept of Small Scale DAB (SSDAB).  Creativity and new operators in local markets could easily be snuffed out.  Alternatively if a new Local DAB/SSDAB tariff were sensibly created, allowing new stations to thrive the simple equation is more stations equals more sustained royalty revenue.

The problem is fully demonstrated when it is noted that under current procedures a local commercial station (FM, DAB or otherwise) that is billing hundreds of thousands is classified under a traditional commercial licence agreement.  A much smaller station (Independent DAB or SSDAB) currently falls under the same traditional tariff.  Some of these only bill hundreds, some nothing at all but under current licencing must pay a minimum level or over that a Net broadcast revenue (NBR) rate.

You may or may not know that the current licence agreements include regular increases according to the Retail Price Index, (RPI).  It would be really great if independent stations could realistically also apply that to client charges, unlikely!  One thing is clear, a new tariff for the brave new world of local radio services is overdue.

For a sustainable future to the benefit of artists, royalty revenues and new economic model stations there is now an urgent need for a stock check!  If all stakeholders can’t make this happen I worry.  Let’s be positive and hope all involved can push through a sensible way forward that if done right can be a win for all!

Phil England

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