ASMEC Forum highlights problems in online licensing

November 2006


A forum put together by ASMEC, the Association of Streaming Media Companies, has highlighted how the Collection Societies are struggling to keep up with the demands of the new media companies as they present new and varied business models which use music in a variety of ways. Presentations form both Phonographic Performance Limited (PPL) and the MCPS-PRS Alliance set out current business models and licences available to online companies. The PPL’s licences are based on a approximate payment of 0.05p per track streamed for the sound recording right (but does not include the download right which is retained by labels). The MCPS-PRS Joint Online Scheme (JOL) allows the user to use music in return for a payment of 8% plus VAT of gross revenues (subject to a minimum payment of £500 plus VAT per annum. The MCPS-PRS Alliance also had a (LOEL) Limited Online Exploitation Licence for services generating less than £4,250 in revenue per annum based on a flat fee between £50 and £400. Both of these licences cover full track downloads, clips, on demand streaming and webcasting. The presentations met with some criticisms from the Forum audience – particularly questioning why PPL online licence rates were substantially higher than those charged to commercial radio in the UK. A very clear speech from lawyer Gregor Pryor outlined the problems facing the online community against the background of legal online services attempting to launch businesses in the face of widespread piracy. Gregor noted that one of the major problems was that old business models simply don’t apply to new internet businesses and in particular the territorial nature of copyright was outdated. One contributor from the floor pointed out that to clear a track for streaming/downloading in Europe might require between forty and sixty negotiations with various collection societies and/or record labels across Europe. Whilst the IFPI have introduced a webcasting agreement this relies on destination use royalty rates (which vary across the world). The PPL also have reciprocal arrangements with 39 other collection societies for sound recordings across the world (in Europe and Australasia) but again these agreements implement destination royalty rates which vary from country to country. Music publishing collection societies do not even have this coherence as the European Commission questioned the ‘one stop shop’ system of licencing in Europe set up by the Santiago Agreement and this was scrapped in 2004. Gregor also pointed out that not all of the major rights owners agreed on a way forward and that other issues such as DRM (digital rights management) and consumer rights also had to be considered. The end result of the current raft of problems led Gregor to suggest that new licensing schemes had to be developed but this had to be done alongside new and innovative models for the licensing of copyright and payment for copyright use. The Forum also heard useful presentations from Playlouder MSP, Totally Radio and LAST FM. All of these presentations reinforced the view that the industry needs to develop innovative licensing schemes to grow the music economy – hopefully allowing both the media companies and the music industry companies to (somehow!) divide up a bigger pool of revenues.

What became apparent was that in a constantly changing market a ‘one size fits all’ approach currently used by collection societies simply doesn’t suit the needs of the users of commercial copyright. It was equally apparent that traditional views on copyrights (in particular the different ‘rights’ divided up between different societies and owners – streaming rights – podcast rights – on demand rights – broadcasting rights – download rights ) and territorial rights are simply nor shared or understood by consumers who, when faced with the non availability of music from a legal source, will in many cases simply source the music for free. This does no-one in the music industry any favours. But to be fair, the collection societies are membership societies and in a number of cases simply do not have a mandate to allow for certain uses (for example it is record labels rather than the PPL who licence download rights) or need to have members agreement before they can revise licensing schemes. But the collection societies and their members are going to have to wake up to the fact that if they cannot licence legal use then they will simply be helping the pirate/illegal services or illegal peer-2-peer file swapping – both of which will provide music to consumers without licences or payments – with no return to the music industry and the very members the collection societies represent.

The speakers at the Forum included Matt McLeer (PPL), Andy Harrison (MCPS-PRS Alliance), Paul Hitchman (Playlouder) and Martin Sitskill (Last FM). The Forum was moderated by Asmec’s Tom Lousada. The Forum was also a chance for the MCPS-PRS Alliance to announce that they had partially settled their impending Copyright Tribunal case with the BPI on behalf of its record label members, iTunes, mobile phone operators and streaming media companies. The BPI, iTunes, Vodafone, Orange, T Mobile and O2 have now agreed a royalty rate for online use of 8% of revenues. This was followed by the news that Napster, Sony Connect and Music Net have also agreed terms. The remaining matters referred to the Tribunal remain outstanding and will be heard after a short delay after the Tribunal agreed to an extension of time to allow further negotiations.

Asmec’s website is at

The MCPS-PRS Alliance website is at 

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