Major threats to recorded and live music venues alike

There have been two recent developments worthy of comment, each of which present major threats to recorded and live music venues alike.

1  PPL SFE Tariff

Music licensing company PPL has published details of its new Specially Featured Entertainment (SFE) tariff, coming into effect on 1 July 2019 (that can be downloaded below).

This follows a consultation on which we have:

PPL states as follows on its website:

The new tariff relates to the playing of recorded music in public at events such as discos and DJ nights and applies to nightclubs, pubs and bars, cafes and restaurants, and hotels.

The announcement follows a formal period of consultation with PPL’s SFE licensees between July and October 2018, covering the scope, structure, fees and implementation of a new SFE tariff. The current tariff has been in place for around 30 years, and PPL’s view, supported by economic analysis, is that the fees in it are too low to be an appropriate reflection of the value to businesses of using recorded music at SFE events. PPL also believes the SFE tariff requires structural reform to make it clearer and fairer.

The new SFE tariff will therefore see a number of changes and clarifications, including:

  • Measuring the audience at an SFE event by using the total number of admissions to the event.
  • A change so that the fee will increase in direct proportion to the size of the audience (measured in bands of 25 persons). This will help to ensure SFE events with different audiences are treated fairly and consistently.
  • The introduction of two new smaller tariff bands, for SFE events with attendances of 1-25 and 26-50 persons. In many cases, this will help to ensure that licensees with small SFE events will initially pay less for such events than they are paying under the current SFE tariff.
  • The phased introduction of increased fees over a 5 year period from July 2019, based on an initial rate of 4 pence per person per hour (up slightly from the current average of 3.9 pence per person per hour). This will move to fees based on a rate of 9 pence per person per hour by 2023 (subject to annual indexation), giving licensees time to adapt to the increases.

PPL Chief Executive Officer Peter Leathem is quoted as saying:

I would like to thank our licensees for engaging with PPL’s Specially Featured Entertainment (SFE) consultation. We have listened to their views as part of finalising our new SFE tariff. Recorded music forms a very significant part of SFE events and we believe that the new SFE tariff delivers a fairer return for our members who create that music. We look forward to working with our licensees and their representatives to ensure as smooth a transition as possible to the new SFE tariff.

Considerably less positive comments have emanated from UK Hospitality and the BBPA.

UKHospitality chief executive Kate Nicholls has been reported as saying:

This new tax will see venues hit with an average 130% increase, which we estimate will cost the hospitality sector upwards of £49m. Music plays an enormous role in our lives culturally and socially as well as economically, but extra fees such as PPL’s will only wring the last life out of venues. UKHospitality has been in discussions with PPL and repeatedly highlighted the problems this new tariff would lead to. We had some success in avoiding proposed structural changes but it is disappointing to see them ignore our warnings and push ahead with a hike.

Brigid Simmonds, chief executive of the British Beer & Pub Association, has been reported as saying:

We are extremely disappointed by PPL’s decision to raise the tariff on the SFE licence by 130% on average. For the past 18 months we have been in discussions with PPL and have highlighted how the changes proposed to the tariff would be disproportionate and unwarranted.

UPDATE:

On 4 June 2019, PPL published the following ‘update’ on its website:

PPL has now been informed by the British Beer and Pub Association and UK Hospitality, as trade bodies representing a number of PPL’s SFE licensees, that they intend to refer both the current SFE tariff and the new SFE tariff to the Copyright Tribunal for independent review.

When a reference of an existing tariff is made to the Copyright Tribunal in this way, that tariff must remain in force pending any decision from the Tribunal.

Therefore, if the trade bodies proceed with their reference, PPL PRS Ltd will continue to invoice licensees at Nightclubs, Pubs / Bars, Restaurants / Cafes and Hotels under the current SFE tariff (Specially Featured Entertainment PPLPP001) for the time being.

If the Copyright Tribunal approves PPL’s new SFE tariff (or otherwise decides that the current tariff needs to be varied), it may backdate the resulting SFE tariff to the start date of the Tribunal reference.

If you have any queries on the SFE Tariff, please contact SFEreview@ppluk.com

Press enquiries should be directed to public.relations@ppluk.com

The current SFE tariff (Specially Featured Entertainment PPLPP001) will continue to apply to SFE events at other premises until further notice.


2  House of Commons Digital, Culture, Media and Sport Committee Live Music Report

The DCMS Committee has published its “Live Music Report”, that can also be downloaded below. It focuses on live music in the UK and specifically identifies “nationwide closures of music venues” in the last 10 years with added comment that “the sites that remain face a struggle to stay open given rising costs and declining revenues”.

The summary at the beginning of the report states as follows:

Live music makes a significant contribution to the UK’s economy and cultural life, attracting tourists from around the world, employing thousands in delivering live events, supporting hospitality and infrastructure supply chains and, perhaps most importantly, inspiring and entertaining music lovers around the country. However, there are concerns about the sustainability of the industry and the uneven distribution of its benefits both around the country and among those who work in it.

For consumers, ticket touting remains one of the most prominent concerns: there is still a need for urgent measures to address this part of the market. There has been significant progress by enforcement agencies in bringing secondary resale platforms into line with consumer law, and changes within the industry itself to limit the resale of tickets for profit; however, the conduct of viagogo, in particular, has caused distress for too many music fans for too long.

While the image of music being a glamorous industry might be true for a minority of artists, the experiences of those working at the grassroots level tell a different story entirely. In the past decade the UK has seen nationwide closures of music venues, and the sites that remain face a struggle to stay open given rising costs and declining revenues. That poses an immediate threat to the development of the next generation of talent and fans. We have also heard how prejudices against grime artists risk stifling one of the UK’s most exciting musical exports.

Many musicians are also struggling to make a sustainable living from live music. Their ability to tour in Europe, or for European musicians to work in the UK, may be further compromised after Britain leaves the EU. The effects of any such development are likely to be felt most acutely by those from poorer socioeconomic backgrounds, a demographic that we are concerned is also being unduly affected by the Government’s policies for music education.

Historically, the buoyancy of the UK’s music sector as a whole has enabled it to remain at a distance from public subsidy; however, in the light of all these challenges the Government needs to play a greater role in supporting and incentivising the industry to support the grassroots in order to secure the UK’s live music heritage into the future. Likewise, a thorough post-legislative review of the Live Music Act 2012 should help the Government to identify where regulations can be further scaled back to the benefit of music venues.

Its stated conclusions and recommendations (citing the relevant paragraph numbers within the report) are as follows:

  1. Live music is a valuable and vibrant part of the UK’s culture; however, we cannot take its past success for granted, and must safeguard the industry and spread its benefits more evenly. Historically, this may not have been considered a role for central or local government because of the strength and profitability of the UK’s music industry; however, there are practical ways in which policymakers and local authorities can support the sector. (Paragraph 18)
  2. We recommend the establishment of regional ‘Music Boards’, comprising representatives from the music industry, policymakers and other relevant stakeholders, to advocate for the live music sector and promote its interests in planning and policy decisions. We ask the Government to support the formation of such bodies through its devolution deals, or the Local Enterprise Partnerships in areas where no combined authorities have been established. (Paragraph 19)
  3. We ask the Competition and Markets Authority to consider conducting a market study of the music industry to assess whether competition in the market is working effectively for both consumers and those working in the industry. (Paragraph 20)
  4. We welcome the abolition of the Metropolitan Police’s form 696 following concerns that it unfairly targeted certain artists and audiences, but it is concerning to hear that prejudices against urban acts persist. The Department for Digital, Culture, Media and Sport, Ministry of Housing, Communities and Local Government and the Home Office should work together to develop guidance for licensing authorities, police forces and music venues on how to collaborate on managing risks to ensure that urban music acts are not unfairly targeted. (Paragraph 24
  5. We welcome the changes that the Advertising Standards Authority and Competition and Markets Authority have secured to the business practices of some of the major secondary ticketing platforms; however, we regret that such time and public money is being spent on bringing the platforms, principally viagogo, into line with consumer law that they should have complied with from the outset. We believe that viagogo has yet to prove itself a trustworthy operator given its history of resisting compliance, court orders and parliamentary scrutiny, and flouting consumer law. We recognise that it will take the CMA time to prepare evidence on whether viagogo is compliant with the court order against it; however, we are concerned that while that work takes place, consumers remain vulnerable to the site’s misleading sales practices. It is imperative that the CMA acts promptly and decisively to bring viagogo into line with consumer law and, until it does so, we advise the public not to buy or sell tickets via viagogo. (Paragraph 41)
  6. StubHub and viagogo’s ultimate compliance with consumer law should mitigate many of the problems that consumers have previously experienced; however, it would be naive to assume all problems will immediately cease. Indeed, this is recognised in the primary market, which has the STAR Code of Practice and Alternative Dispute Resolution scheme, both of which are also needed in the secondary market. Fans need a quicker and easier process for dispute resolution; given that the ticketing market is the first stage in most fans’ journeys, poor experiences risk blighting people’s enjoyment of live music and draining even more money out of the industry. (Paragraph 46)
  7. The Breaching of Limits on Ticket Sales Regulations 2018 are a welcome step in the fight against ticket touts; however, they are not the only solution to the harvesting of tickets. Robust enforcement, technological solutions and the work of primary platforms will be central to combatting the use of bots. We request that in its response to this report the Government lays out how it intends to review the effectiveness of the regulations. We also ask the Government to publish a review of the regulations no later than 18 months from their coming into force, and for it to include how much has been spent by National Trading Standards on monitoring and enforcement activity related to the regulations. (Paragraph 51)
  8. This is a time of significant change in the ticketing market, as illustrated by Ticketmaster’s new integrated platform; however, voluntary fan-to-fan exchange is not going to solve all the problems in the secondary market. Touting for profit, or harvesting tickets ahead of other consumers, is still a major source of consumer dissatisfaction. We recognise the industry’s adoption of technological solutions such as digital ticketing or terms and conditions limiting resale; however, it is important that these are always exercised in the interests of consumers and are not used to stifle competition or unfairly penalise fans who have unknowingly bought tickets on resale sites. (Paragraph 54)
  9. It is firstly the responsibility of the advertiser to ensure that they are complying with the advertising code and consumer protection law when marketing their goods and services to potential customers. However, media owners also have a responsibility to the audiences they serve. Google has repeatedly allowed ticket resellers to target customers with products that are being sold in breach of Google’s own ad policies and UK law. It is time for companies such as Google to take more responsibility and act against such advertising, or else be considered to be knowingly making money out of fraudulent selling. (Paragraph 59)
  10. We ask the Government to set out the responsibilities of companies such as Google to ensure that adverts targeted at their users comply with UK consumer protection law. This should include what action these companies should take against the adverts themselves, and the advertisers. Ticket sellers found to be trading in breach of the law should be prevented from advertising. Companies such as Google should also face some sanction for failing to act against sellers in breach of the law. (Paragraph 60)
  11. The closure of music venues presents a significant and urgent challenge to the UK’s music industry and cultural vibrancy. The Government has not acted promptly enough to stem the tide of these closures, which have been happening at a rate unprecedented in other cultural sectors for more than 10 years. The full impact of these closures may not be felt immediately; however, there is a real threat that without access to spaces to hone their live craft, the next generation of musicians will struggle to maintain the UK’s position at the forefront of the industry. (Paragraph 65)
  12. Business rate rises and applying for associated reliefs place a financial and administrative burden on already over-stretched grassroots music venues and independent festivals. The Government should immediately review the impact of recent business rates changes on the live music sector and introduce new, or extend existing, relief schemes, such as those for pubs or small retail properties, to lessen the burden of business rates on music venues. (Paragraph 71)
  13. We welcome the inclusion of the ‘agent of change’ principle in planning policy as there is a legal obligation on local authorities to comply with it; however, robust and consistent implementation of the principle nationwide is crucial for it to be of meaningful benefit to live music venues. Moreover, the principle does not address the full array of development pressures that live music venues experience. We recommend that in the next legislative session the Government appoints a statutory consultative body to promote the protection of music venues, provide advice to local authorities on relevant planning applications and monitor how ‘agent of change’ is applied in practice around the country. (Paragraph 76)
  14. The Government is expected to produce post-legislative memorandums within three to five years of legislation gaining Royal Assent; however, we are yet to receive such a memorandum for the Live Music Act 2012. The Government needs to conduct thorough scrutiny of the impact of the Act this year. We request that the Government supplies us with a full post-legislative memorandum for the Live Music Act 2012 before the end of this parliamentary session. We believe that the Government should amend the Act to extend its provisions to venues with a capacity over 500 and beyond 11pm and ask for the memorandum to consider these proposals and set out the Government’s intentions for them. We also ask the Government to extend the creative industries tax relief to support other forms of music production, in addition to that already given for orchestral performances. (Paragraph 85)
  15. It is unsurprising that the live music sector has a history of under-engagement with Government and funding bodies, given the staffing constraints many venues face and the low rates of support for grassroots venues in Arts Council England’s flagship funding programme. Nonetheless, we recognise that the current imbalance in funding is not sustainable and welcome ACE’s commitment to engage with music venues and learn from its experiences with other sectors. We ask that in its next ten-year strategy, the Arts Council makes explicit how it plans to redress the balance in funding for grassroots venues and contemporary music, with a view to securing the infrastructure and leadership that will enable them to maximise business opportunities. (Paragraph 91)
  16. While there are many different routes into a career in music, without access to an appropriate education, high-quality facilities or reliable income streams, people from a diverse range of backgrounds will struggle to build viable careers in the industry. It is impossible to know where the next multi-million-selling artist or classical virtuoso will come from, and it is therefore important that young people and musicians have opportunities to develop their talent irrespective of their socioeconomic background. (Paragraph 93)
  17. We welcome the Government’s intention to review the music curriculum. The Government’s independent expert panel should engage musicians from different genres, stakeholders from across the music industry, and young people to ensure the new model music curriculum reflects how people make and consume music in the modern age, as well as the industry’s skills-needs now and into the future.(Paragraph 98)
  18. In 2013 our predecessor Committee recommended in its report on ‘Supporting the creative economy’ that arts be included in the list of approved EBacc subjects, and the concerns we have heard during this inquiry suggest the need is no less pressing now. We repeat the call for arts subjects to be added to the EBacc to ensure all students benefit from a creative education at GCSE. (Paragraph 103)
  19. Music Education Hubs are a valuable resource and we welcome the Government’s commitment to extending the National Plan for Music Education beyond 2020. However, we are concerned that not enough is known about how provision varies between Hubs and not enough emphasis is put on sharing best practice. As part of its review into the effectiveness of the existing National Plan for Music Education, the Government should conduct a thorough study of where provision by Hubs is good and where it could be improved. We recommend that any future plan ensures all Hubs have sufficient financial resources and workplace expertise to perform high quality evaluation of their work and impact, and that improved processes are in place to monitor performance and share best practice. (Paragraph 106)
  20. Structural problems within the music industry limit artists’ ability to earn a sustainable income, and that in turn risks excluding sections of society from a career in music. The industry needs to ensure a greater proportion of its revenues is channelled into supporting artists at the early stages of their careers. We recommend that the Department for Digital, Culture, Media and Sport and UK Music convene a taskforce this year comprised of musicians’ representatives and corporate stakeholders to explore how the industry may be supported and incentivised to invest more effectively in supporting grassroots talent. (Paragraph 113)
  21. Ensuring frictionless travel for musicians, touring personnel and their equipment is essential for musicians to continue to access work opportunities abroad, and for foreign artists to tour to the UK. We support the industry’s calls for the introduction of an EU-wide touring visa, which the Government should pursue in its future relationship with the European Union. We also urge the Government to resist any arrangements that would result in the reintroduction of temporary customs documents for touring equipment. (Paragraph 116)
  22. Given the Migration Advisory Committee’s failure to mention the creative industries in its report, it is important that the Government gives due consideration to the needs of the creative industries when formulating its post-Brexit immigration policy. We welcome the fact that the Government will undertake further consultation before deciding on the salary threshold for skilled workers; however, we maintain the view that salary is not an accurate reflection of value to the country’s cultural life or economy. We repeat our call for the Government to develop an immigration policy that recognises the broader contribution individuals make, beyond their salary level. We also ask the Government to detail in its response to this report how it will engage with the music industry and consider the industry’s views in the formulation of its immigration policy. (Paragraph 121)

 

Download article PDF: PPL SFE TARIFF