fbpx
x

The latest industry news to your inbox.

    

I'd like to hear about marketing opportunities

    

I accept IQ Magazine's Terms and Conditions and Privacy Policy

comment

The complexities of direct licensing

Maria Forte offers consultancy and management skills to artists, writers and music businesses. Here, she highlights some of the practical issues with direct licensing

25 Oct 2016

Maria Forte

My initial thoughts in regard to direct licensing were What a good idea! But looking into it and working out the mechanics casts a rather different light on the matter.

At face value, the prospect looks simple: an artist, who writes their own material, serves notice on the PRS to exclude the works on their set list. This could be for any number of songs and territories. The artist then directly licenses the concert to the promoter of the day. Seems easy enough, but being involved at a detailed level in the process, I quickly realised how much more complex it was in practice. Additionally, applying this to festivals fragments the process even further, with multiple bands over multiple stages where most will be licensed through the usual established channels.

Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base, nor did they wish to disclose their intended set list). A writer’s music publisher needs to reassign their publisher’s share as well, however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.

Then you have questions like: What if there is an outstanding advance with the publisher? Who is going to make the royalty calculations back to them? Will they even want to participate in the process? What is the local performance royalty rate applied in each territory and will a discount apply? What is the main versus support split? What does pro rata really mean? What if the support acts do not want to directly license? What if they cannot (or would not be released to do so)? What if the artist wants to perform a cover? (Exclusion needs to be total and not partial, and who is going to tell them they can’t?) What if the artist wants to change their set list during the tour?

Once on the road, it is too late to change documentation, since the process to directly license is a legal one that is governed by a writer’s society membership agreement.

“Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax, of either artist or writer/publisher, needs to stop”

I work closely with the management of a major touring artist (who writes their own songs). Having worked with the PRS to ‘audit’ past tours and now the current tour, we can see the varied picture of the real-time licensing in territories around the world. Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies.

Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them. The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist? Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff? Why are some under-declaring box office figures to local societies – thus reducing payments to local societies/writers/publishers?

There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.

Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.

What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships. Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

FOLLOW IQ

5 responses to “The complexities of direct licensing”

  1. The Truth says:

    We must all thank Maria for increasing the profile of Direct Licencing, and giving the opportunity to clear up many of the myths and misunderstandings perpetrated by the PRO’s (and seemingly now Maria as well), as they try to dissuade Rights Owners from utilising a solution that will get those Rights Owners more money, get them their money quicker, and get it to them more transparently. That solution is not the traditional PRO route, but Direct Licencing.

    We should also take this opportunity to ask Maria to clear up her own situation. Please Maria, can you enlighten the readers as to whether you are paid consultant of the PRS (or have been recently)?

    Lets go through Maria’s comments line by line…

    **See below.

    Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base,
    **Then they don’t. As the re-assignment process normally happens months after the tour has been announced, this is not even a consideration.

    nor did they wish to disclose their intended set list).
    **Then they don’t. Usually the writers re-assign a pool of works (that’s around two to three times the actual length of the set) that they might perform, which generally includes all of the present album, their greatest hits, and a load of other works. Nothing anyone wouldn’t be able to guess could possibly be performed, or enough information for a third party to disseminate a definitive set-list prior to the show.

    A writer’s music publisher needs to reassign their publisher’s share as well,
    **That’s incorrect.

    however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
    **If that clause exists in the relevant publishing agreement, then that is correct. For UK contracts, the responsibility for that clause having an impact on Direct Licencing ultimately comes down to the failure of the PRS to adhere to their requirements from the MMC investigation into them in 1996-7, where:
    42. Article 7 of the Articles of Association to be amended to allow self-administration of the live performance right.
    43. Article 7 of the Articles of Association to be amended to make it clear that members already have the right to self-administer the categories of performing rights specified in the GEMA decision.
    44. The PRS to publicize the changes to Article 7.
    As the PRS has failed to publicise Article 7, then writers (and those that advise them, managers, lawyers and accountants) were unaware what the implications of that clause was, and therefore didn’t address it in the negotiation process of their publishing deal. The intention of the MMC (and their current organisation, the Competition and Markets Authority (CMA) ) was surely not to block members from “self-administration of the live performance right.”

    Then you have questions like: What if there is an outstanding advance with the publisher?
    **With Direct Licencing, the publisher will get more money, and the advance will be paid off quicker.

    Who is going to make the royalty calculations back to them?
    **The person mandated to handle the Direct Licencing. Its a very simple and far more transparent royalty calculation than they presently receive.

    Will they even want to participate in the process?
    **So far they generally have.

    What is the local performance royalty rate applied in each territory and will a discount apply?
    **That’s a decision for the Rights Owners who have re-assigned and Direct Licencing, and of course the Rights Owners won’t grant a kickback/rebate/discount.

    What is the main versus support split?
    **That depends on whether that has been agreed with the support prior to their confirmation on the tour. Or if not, you use the existing support policy of the PRO in the territory.

    What does pro rata really mean?
    **Generally that each work has an equal weighting, and the value of that work is then shared between the Rights Owners on their agreed splits. Most PRO’s are happy with that. But as Maria no doubt knows, the PRS don’t want to agree to that, as they would prefer a less accurate, more expensive, and more administrative heavy policy, so its an ongoing discussion with them.

    What if the support acts do not want to directly license?
    **Then they don’t.

    What if they cannot (or would not be released to do so)?
    **Then they don’t.

    What if the artist wants to perform a cover?
    **Then they perform a cover. And if the Rights Owners of that cover are Direct Licencing, then that work will also be Direct Licenced. And if they are not, then that proportion of the set is not Direct Licenced (e.g. 10 songs performed, 1 is a cover, so 90% of the set is Direct Licenced, and 10% is not).

    (Exclusion needs to be total and not partial, and who is going to tell them they can’t?)
    **That’s incorrect.

    What if the artist wants to change their set list during the tour?
    **Then they change it. If they are changing it to rights that have been re-assigned, then they are changing it from one song that will be Direct Licenced, to another song that will also be Direct Licenced. And if they haven’t re-assigned the song they want to perform (and therefore it won’t be Direct Licenced), then its handled the same way as a cover (see above).

    Once on the road, it is too late to change documentation
    **That’s incorrect. It depends on 1) How long the tour is. 2) What the processing time that’s required by the relevant PRO. Unfortunately the PRS have an unreasonably long processing time of 60 days. Does the PRS really need 60 days to turn round the paperwork (when other PRO’s only need a couple of hours)?

    Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies. Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them.
    **Well no, it starts with fans buying tickets, and generating the value for the rights.

    The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist?
    **Because its obviously in their financial interest not to. Whereas the question should be, why does the PRO allow the kickback system, and if they do, why aren’t the PRO’s transparent and publish a list of the promoters/festivals in their territory, and what kickback they each receive?

    Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff?
    **Because its obviously in their financial interest to do that. The promoters are only taking advantage of an opportunity presented to them by the PRO’s.

    Why are some under-declaring box office figures to local societies &#8211 thus reducing payments to local societies/writers/publishers?
    **That would be an issue for the PRO’s to resolve for their rights.

    There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
    **Do the PROs’ mandate’s allow them to grant a kickback/discount/rebate on their members’ income? Maria, can you ask the PRS to demonstrate in their mandate from their members where it allows them to authorise affiliated PRO’s the right to grant kickback/discount/rebate on their members’ income?

    Promoters need to earn their crust, much like any of us &#8211 but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
    **Its interesting that Maria talks about having less opacity, as is the PRS transparent with their members? Does the PRS (or any other PRO) publish one list for their members (so the information is easily accessible) of territories with following relevant information:
    – The deductions that the affiliated PRO takes in the foreign territory on their members’ money.
    – The deduction that the PRS takes from income from the territory.
    – The support calculation in the territory.
    – The standard distribution time for live public performance rights income from that territory (from performance to being received by the writer/publisher).
    – A list of promoters from that territory, and what kickbacks they each receive.
    All information that the PRS already has and/or could get for all their members.

    What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships.
    **Is the PRS doing this (see above)? People have been asking them to do this for years.

    Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.
    **Its interesting that Maria has completely failed to highlight the benefits of Direct Licencing in terms of the writers &#38 publishers not suffering any promoter kickbacks, but also not suffering the deductions from the PRO’s, but that they also can receive their money quicker, and receive it more transparently. So what there needs to be, is more transparency from the PRO’s.

    **So despite what Maria has written above, if you understand the process (and maybe Maria doesn’t), Direct Licencing can be pretty straight-forward, and enables the writers &#38 publishers to receive more money, receive it quicker and receive it more transparently. And if there are any issues to address for Direct Licencing in a particular territory, those will be worked out over the next couple of years. Lets not forget, the traditional system of licencing live performances through PRO’s has evolved unchallenged over the last 100+ years. Which is why its developed in to this opaque, inefficient and expensive system that’s riddled with self-interest. Its going to take a moment to work through any issues, and implement the new and improved version of licencing live performance rights with Direct Licencing…but we’ll all get there.

  2. The Truth says:

    We must all thank Maria for increasing the profile of Direct Licencing, and giving the opportunity to clear up many of the myths and misunderstandings perpetrated by the PRO’s (and seemingly now Maria as well), as they try to dissuade Rights Owners from utilising a solution that will get those Rights Owners more money, get them their money quicker, and get it to them more transparently. That solution is not the traditional PRO route, but Direct Licencing.

    We should also take this opportunity to ask Maria to clear up her own situation. Please Maria, can you enlighten the readers as to whether you are paid consultant of the PRS (or have been recently)?

    Lets go through Maria’s comments line by line…

    **See below.

    Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base,
    **Then they don’t. As the re-assignment process normally happens months after the tour has been announced, this is not even a consideration.

    nor did they wish to disclose their intended set list).
    **Then they don’t. Usually the writers re-assign a pool of works (that’s around two to three times the actual length of the set) that they might perform, which generally includes all of the present album, their greatest hits, and a load of other works. Nothing anyone wouldn’t be able to guess could possibly be performed, or enough information for a third party to disseminate a definitive set-list prior to the show.

    A writer’s music publisher needs to reassign their publisher’s share as well,
    **That’s incorrect.

    however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
    **If that clause exists in the relevant publishing agreement, then that is correct. For UK contracts, the responsibility for that clause having an impact on Direct Licencing ultimately comes down to the failure of the PRS to adhere to their requirements from the MMC investigation into them in 1996-7, where:
    42. Article 7 of the Articles of Association to be amended to allow self-administration of the live performance right.
    43. Article 7 of the Articles of Association to be amended to make it clear that members already have the right to self-administer the categories of performing rights specified in the GEMA decision.
    44. The PRS to publicize the changes to Article 7.
    As the PRS has failed to publicise Article 7, then writers (and those that advise them, managers, lawyers and accountants) were unaware what the implications of that clause was, and therefore didn’t address it in the negotiation process of their publishing deal. The intention of the MMC (and their current organisation, the Competition and Markets Authority (CMA) ) was surely not to block members from “self-administration of the live performance right.”

    Then you have questions like: What if there is an outstanding advance with the publisher?
    **With Direct Licencing, the publisher will get more money, and the advance will be paid off quicker.

    Who is going to make the royalty calculations back to them?
    **The person mandated to handle the Direct Licencing. Its a very simple and far more transparent royalty calculation than they presently receive.

    Will they even want to participate in the process?
    **So far they generally have.

    What is the local performance royalty rate applied in each territory and will a discount apply?
    **That’s a decision for the Rights Owners who have re-assigned and Direct Licencing, and of course the Rights Owners won’t grant a kickback/rebate/discount.

    What is the main versus support split?
    **That depends on whether that has been agreed with the support prior to their confirmation on the tour. Or if not, you use the existing support policy of the PRO in the territory.

    What does pro rata really mean?
    **Generally that each work has an equal weighting, and the value of that work is then shared between the Rights Owners on their agreed splits. Most PRO’s are happy with that. But as Maria no doubt knows, the PRS don’t want to agree to that, as they would prefer a less accurate, more expensive, and more administrative heavy policy, so its an ongoing discussion with them.

    What if the support acts do not want to directly license?
    **Then they don’t.

    What if they cannot (or would not be released to do so)?
    **Then they don’t.

    What if the artist wants to perform a cover?
    **Then they perform a cover. And if the Rights Owners of that cover are Direct Licencing, then that work will also be Direct Licenced. And if they are not, then that proportion of the set is not Direct Licenced (e.g. 10 songs performed, 1 is a cover, so 90% of the set is Direct Licenced, and 10% is not).

    (Exclusion needs to be total and not partial, and who is going to tell them they can’t?)
    **That’s incorrect.

    What if the artist wants to change their set list during the tour?
    **Then they change it. If they are changing it to rights that have been re-assigned, then they are changing it from one song that will be Direct Licenced, to another song that will also be Direct Licenced. And if they haven’t re-assigned the song they want to perform (and therefore it won’t be Direct Licenced), then its handled the same way as a cover (see above).

    Once on the road, it is too late to change documentation
    **That’s incorrect. It depends on 1) How long the tour is. 2) What the processing time that’s required by the relevant PRO. Unfortunately the PRS have an unreasonably long processing time of 60 days. Does the PRS really need 60 days to turn round the paperwork (when other PRO’s only need a couple of hours)?

    Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies. Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them.
    **Well no, it starts with fans buying tickets, and generating the value for the rights.

    The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist?
    **Because its obviously in their financial interest not to. Whereas the question should be, why does the PRO allow the kickback system, and if they do, why aren’t the PRO’s transparent and publish a list of the promoters/festivals in their territory, and what kickback they each receive?

    Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff?
    **Because its obviously in their financial interest to do that. The promoters are only taking advantage of an opportunity presented to them by the PRO’s.

    Why are some under-declaring box office figures to local societies &#8211 thus reducing payments to local societies/writers/publishers?
    **That would be an issue for the PRO’s to resolve for their rights.

    There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
    **Do the PROs’ mandate’s allow them to grant a kickback/discount/rebate on their members’ income? Maria, can you ask the PRS to demonstrate in their mandate from their members where it allows them to authorise affiliated PRO’s the right to grant kickback/discount/rebate on their members’ income?

    Promoters need to earn their crust, much like any of us &#8211 but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
    **Its interesting that Maria talks about having less opacity, as is the PRS transparent with their members? Does the PRS (or any other PRO) publish one list for their members (so the information is easily accessible) of territories with following relevant information:
    – The deductions that the affiliated PRO takes in the foreign territory on their members’ money.
    – The deduction that the PRS takes from income from the territory.
    – The support calculation in the territory.
    – The standard distribution time for live public performance rights income from that territory (from performance to being received by the writer/publisher).
    – A list of promoters from that territory, and what kickbacks they each receive.
    All information that the PRS already has and/or could get for all their members.

    What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships.
    **Is the PRS doing this (see above)? People have been asking them to do this for years.

    Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.
    **Its interesting that Maria has completely failed to highlight the benefits of Direct Licencing in terms of the writers &#38 publishers not suffering any promoter kickbacks, but also not suffering the deductions from the PRO’s, but that they also can receive their money quicker, and receive it more transparently. So what there needs to be, is more transparency from the PRO’s.

    **So despite what Maria has written above, if you understand the process (and maybe Maria doesn’t), Direct Licencing can be pretty straight-forward, and enables the writers &#38 publishers to receive more money, receive it quicker and receive it more transparently. And if there are any issues to address for Direct Licencing in a particular territory, those will be worked out over the next couple of years. Lets not forget, the traditional system of licencing live performances through PRO’s has evolved unchallenged over the last 100+ years. Which is why its developed in to this opaque, inefficient and expensive system that’s riddled with self-interest. Its going to take a moment to work through any issues, and implement the new and improved version of licencing live performance rights with Direct Licencing…but we’ll all get there.

  3. The Truth says:

    We must all thank Maria for increasing the profile of Direct Licencing, and giving the opportunity to clear up many of the myths and misunderstandings perpetrated by the PRO’s (and seemingly now Maria as well), as they try to dissuade Rights Owners from utilising a solution that will get those Rights Owners more money, get them their money quicker, and get it to them more transparently. That solution is not the traditional PRO route, but Direct Licencing.

    We should also take this opportunity to ask Maria to clear up her own situation. Please Maria, can you enlighten the readers as to whether you are paid consultant of the PRS (or have been recently)?

    Lets go through Maria’s comments line by line…

    **See below.

    Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base,
    **Then they don’t. As the re-assignment process normally happens months after the tour has been announced, this is not even a consideration.

    nor did they wish to disclose their intended set list).
    **Then they don’t. Usually the writers re-assign a pool of works (that’s around two to three times the actual length of the set) that they might perform, which generally includes all of the present album, their greatest hits, and a load of other works. Nothing anyone wouldn’t be able to guess could possibly be performed, or enough information for a third party to disseminate a definitive set-list prior to the show.

    A writer’s music publisher needs to reassign their publisher’s share as well,
    **That’s incorrect.

    however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
    **If that clause exists in the relevant publishing agreement, then that is correct. For UK contracts, the responsibility for that clause having an impact on Direct Licencing ultimately comes down to the failure of the PRS to adhere to their requirements from the MMC investigation into them in 1996-7, where:
    42. Article 7 of the Articles of Association to be amended to allow self-administration of the live performance right.
    43. Article 7 of the Articles of Association to be amended to make it clear that members already have the right to self-administer the categories of performing rights specified in the GEMA decision.
    44. The PRS to publicize the changes to Article 7.
    As the PRS has failed to publicise Article 7, then writers (and those that advise them, managers, lawyers and accountants) were unaware what the implications of that clause was, and therefore didn’t address it in the negotiation process of their publishing deal. The intention of the MMC (and their current organisation, the Competition and Markets Authority (CMA) ) was surely not to block members from “self-administration of the live performance right.”

    Then you have questions like: What if there is an outstanding advance with the publisher?
    **With Direct Licencing, the publisher will get more money, and the advance will be paid off quicker.

    Who is going to make the royalty calculations back to them?
    **The person mandated to handle the Direct Licencing. Its a very simple and far more transparent royalty calculation than they presently receive.

    Will they even want to participate in the process?
    **So far they generally have.

    What is the local performance royalty rate applied in each territory and will a discount apply?
    **That’s a decision for the Rights Owners who have re-assigned and Direct Licencing, and of course the Rights Owners won’t grant a kickback/rebate/discount.

    What is the main versus support split?
    **That depends on whether that has been agreed with the support prior to their confirmation on the tour. Or if not, you use the existing support policy of the PRO in the territory.

    What does pro rata really mean?
    **Generally that each work has an equal weighting, and the value of that work is then shared between the Rights Owners on their agreed splits. Most PRO’s are happy with that. But as Maria no doubt knows, the PRS don’t want to agree to that, as they would prefer a less accurate, more expensive, and more administrative heavy policy, so its an ongoing discussion with them.

    What if the support acts do not want to directly license?
    **Then they don’t.

    What if they cannot (or would not be released to do so)?
    **Then they don’t.

    What if the artist wants to perform a cover?
    **Then they perform a cover. And if the Rights Owners of that cover are Direct Licencing, then that work will also be Direct Licenced. And if they are not, then that proportion of the set is not Direct Licenced (e.g. 10 songs performed, 1 is a cover, so 90% of the set is Direct Licenced, and 10% is not).

    (Exclusion needs to be total and not partial, and who is going to tell them they can’t?)
    **That’s incorrect.

    What if the artist wants to change their set list during the tour?
    **Then they change it. If they are changing it to rights that have been re-assigned, then they are changing it from one song that will be Direct Licenced, to another song that will also be Direct Licenced. And if they haven’t re-assigned the song they want to perform (and therefore it won’t be Direct Licenced), then its handled the same way as a cover (see above).

    Once on the road, it is too late to change documentation
    **That’s incorrect. It depends on 1) How long the tour is. 2) What the processing time that’s required by the relevant PRO. Unfortunately the PRS have an unreasonably long processing time of 60 days. Does the PRS really need 60 days to turn round the paperwork (when other PRO’s only need a couple of hours)?

    Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies. Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them.
    **Well no, it starts with fans buying tickets, and generating the value for the rights.

    The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist?
    **Because its obviously in their financial interest not to. Whereas the question should be, why does the PRO allow the kickback system, and if they do, why aren’t the PRO’s transparent and publish a list of the promoters/festivals in their territory, and what kickback they each receive?

    Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff?
    **Because its obviously in their financial interest to do that. The promoters are only taking advantage of an opportunity presented to them by the PRO’s.

    Why are some under-declaring box office figures to local societies &#8211 thus reducing payments to local societies/writers/publishers?
    **That would be an issue for the PRO’s to resolve for their rights.

    There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
    **Do the PROs’ mandate’s allow them to grant a kickback/discount/rebate on their members’ income? Maria, can you ask the PRS to demonstrate in their mandate from their members where it allows them to authorise affiliated PRO’s the right to grant kickback/discount/rebate on their members’ income?

    Promoters need to earn their crust, much like any of us &#8211 but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
    **Its interesting that Maria talks about having less opacity, as is the PRS transparent with their members? Does the PRS (or any other PRO) publish one list for their members (so the information is easily accessible) of territories with following relevant information:
    – The deductions that the affiliated PRO takes in the foreign territory on their members’ money.
    – The deduction that the PRS takes from income from the territory.
    – The support calculation in the territory.
    – The standard distribution time for live public performance rights income from that territory (from performance to being received by the writer/publisher).
    – A list of promoters from that territory, and what kickbacks they each receive.
    All information that the PRS already has and/or could get for all their members.

    What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships.
    **Is the PRS doing this (see above)? People have been asking them to do this for years.

    Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.
    **Its interesting that Maria has completely failed to highlight the benefits of Direct Licencing in terms of the writers &#38 publishers not suffering any promoter kickbacks, but also not suffering the deductions from the PRO’s, but that they also can receive their money quicker, and receive it more transparently. So what there needs to be, is more transparency from the PRO’s.

    **So despite what Maria has written above, if you understand the process (and maybe Maria doesn’t), Direct Licencing can be pretty straight-forward, and enables the writers &#38 publishers to receive more money, receive it quicker and receive it more transparently. And if there are any issues to address for Direct Licencing in a particular territory, those will be worked out over the next couple of years. Lets not forget, the traditional system of licencing live performances through PRO’s has evolved unchallenged over the last 100+ years. Which is why its developed in to this opaque, inefficient and expensive system that’s riddled with self-interest. Its going to take a moment to work through any issues, and implement the new and improved version of licencing live performance rights with Direct Licencing…but we’ll all get there.

  4. The Truth says:

    We must all thank Maria for increasing the profile of Direct Licencing, and giving the opportunity to clear up many of the myths and misunderstandings perpetrated by the PRO’s (and seemingly now Maria as well), as they try to dissuade Rights Owners from utilising a solution that will get those Rights Owners more money, get them their money quicker, and get it to them more transparently. That solution is not the traditional PRO route, but Direct Licencing.

    We should also take this opportunity to ask Maria to clear up her own situation. Please Maria, can you enlighten the readers as to whether you are paid consultant of the PRS (or have been recently)?

    Lets go through Maria’s comments line by line…

    **See below.

    Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base,
    **Then they don’t. As the re-assignment process normally happens months after the tour has been announced, this is not even a consideration.

    nor did they wish to disclose their intended set list).
    **Then they don’t. Usually the writers re-assign a pool of works (that’s around two to three times the actual length of the set) that they might perform, which generally includes all of the present album, their greatest hits, and a load of other works. Nothing anyone wouldn’t be able to guess could possibly be performed, or enough information for a third party to disseminate a definitive set-list prior to the show.

    A writer’s music publisher needs to reassign their publisher’s share as well,
    **That’s incorrect.

    however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
    **If that clause exists in the relevant publishing agreement, then that is correct. For UK contracts, the responsibility for that clause having an impact on Direct Licencing ultimately comes down to the failure of the PRS to adhere to their requirements from the MMC investigation into them in 1996-7, where:
    42. Article 7 of the Articles of Association to be amended to allow self-administration of the live performance right.
    43. Article 7 of the Articles of Association to be amended to make it clear that members already have the right to self-administer the categories of performing rights specified in the GEMA decision.
    44. The PRS to publicize the changes to Article 7.
    As the PRS has failed to publicise Article 7, then writers (and those that advise them, managers, lawyers and accountants) were unaware what the implications of that clause was, and therefore didn’t address it in the negotiation process of their publishing deal. The intention of the MMC (and their current organisation, the Competition and Markets Authority (CMA) ) was surely not to block members from “self-administration of the live performance right.”

    Then you have questions like: What if there is an outstanding advance with the publisher?
    **With Direct Licencing, the publisher will get more money, and the advance will be paid off quicker.

    Who is going to make the royalty calculations back to them?
    **The person mandated to handle the Direct Licencing. Its a very simple and far more transparent royalty calculation than they presently receive.

    Will they even want to participate in the process?
    **So far they generally have.

    What is the local performance royalty rate applied in each territory and will a discount apply?
    **That’s a decision for the Rights Owners who have re-assigned and Direct Licencing, and of course the Rights Owners won’t grant a kickback/rebate/discount.

    What is the main versus support split?
    **That depends on whether that has been agreed with the support prior to their confirmation on the tour. Or if not, you use the existing support policy of the PRO in the territory.

    What does pro rata really mean?
    **Generally that each work has an equal weighting, and the value of that work is then shared between the Rights Owners on their agreed splits. Most PRO’s are happy with that. But as Maria no doubt knows, the PRS don’t want to agree to that, as they would prefer a less accurate, more expensive, and more administrative heavy policy, so its an ongoing discussion with them.

    What if the support acts do not want to directly license?
    **Then they don’t.

    What if they cannot (or would not be released to do so)?
    **Then they don’t.

    What if the artist wants to perform a cover?
    **Then they perform a cover. And if the Rights Owners of that cover are Direct Licencing, then that work will also be Direct Licenced. And if they are not, then that proportion of the set is not Direct Licenced (e.g. 10 songs performed, 1 is a cover, so 90% of the set is Direct Licenced, and 10% is not).

    (Exclusion needs to be total and not partial, and who is going to tell them they can’t?)
    **That’s incorrect.

    What if the artist wants to change their set list during the tour?
    **Then they change it. If they are changing it to rights that have been re-assigned, then they are changing it from one song that will be Direct Licenced, to another song that will also be Direct Licenced. And if they haven’t re-assigned the song they want to perform (and therefore it won’t be Direct Licenced), then its handled the same way as a cover (see above).

    Once on the road, it is too late to change documentation
    **That’s incorrect. It depends on 1) How long the tour is. 2) What the processing time that’s required by the relevant PRO. Unfortunately the PRS have an unreasonably long processing time of 60 days. Does the PRS really need 60 days to turn round the paperwork (when other PRO’s only need a couple of hours)?

    Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies. Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them.
    **Well no, it starts with fans buying tickets, and generating the value for the rights.

    The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist?
    **Because its obviously in their financial interest not to. Whereas the question should be, why does the PRO allow the kickback system, and if they do, why aren’t the PRO’s transparent and publish a list of the promoters/festivals in their territory, and what kickback they each receive?

    Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff?
    **Because its obviously in their financial interest to do that. The promoters are only taking advantage of an opportunity presented to them by the PRO’s.

    Why are some under-declaring box office figures to local societies – thus reducing payments to local societies/writers/publishers?
    **That would be an issue for the PRO’s to resolve for their rights.

    There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
    **Do the PROs’ mandate’s allow them to grant a kickback/discount/rebate on their members’ income? Maria, can you ask the PRS to demonstrate in their mandate from their members where it allows them to authorise affiliated PRO’s the right to grant kickback/discount/rebate on their members’ income?

    Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
    **Its interesting that Maria talks about having less opacity, as is the PRS transparent with their members? Does the PRS (or any other PRO) publish one list for their members (so the information is easily accessible) of territories with following relevant information:
    – The deductions that the affiliated PRO takes in the foreign territory on their members’ money.
    – The deduction that the PRS takes from income from the territory.
    – The support calculation in the territory.
    – The standard distribution time for live public performance rights income from that territory (from performance to being received by the writer/publisher).
    – A list of promoters from that territory, and what kickbacks they each receive.
    All information that the PRS already has and/or could get for all their members.

    What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships.
    **Is the PRS doing this (see above)? People have been asking them to do this for years.

    Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.
    **Its interesting that Maria has completely failed to highlight the benefits of Direct Licencing in terms of the writers & publishers not suffering any promoter kickbacks, but also not suffering the deductions from the PRO’s, but that they also can receive their money quicker, and receive it more transparently. So what there needs to be, is more transparency from the PRO’s.

    **So despite what Maria has written above, if you understand the process (and maybe Maria doesn’t), Direct Licencing can be pretty straight-forward, and enables the writers & publishers to receive more money, receive it quicker and receive it more transparently. And if there are any issues to address for Direct Licencing in a particular territory, those will be worked out over the next couple of years. Lets not forget, the traditional system of licencing live performances through PRO’s has evolved unchallenged over the last 100+ years. Which is why its developed in to this opaque, inefficient and expensive system that’s riddled with self-interest. Its going to take a moment to work through any issues, and implement the new and improved version of licencing live performance rights with Direct Licencing…but we’ll all get there.

  5. The Truth says:

    We must all thank Maria for increasing the profile of Direct Licencing, and giving the opportunity to clear up many of the myths and misunderstandings perpetrated by the PRO’s (and seemingly now Maria as well), as they try to dissuade Rights Owners from utilising a solution that will get those Rights Owners more money, get them their money quicker, and get it to them more transparently. That solution is not the traditional PRO route, but Direct Licencing.

    We should also take this opportunity to ask Maria to clear up her own situation. Please Maria, can you enlighten the readers as to whether you are paid consultant of the PRS (or have been recently)?

    Lets go through Maria’s comments line by line…

    **See below.

    Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base,
    **Then they don’t. As the re-assignment process normally happens months after the tour has been announced, this is not even a consideration.

    nor did they wish to disclose their intended set list).
    **Then they don’t. Usually the writers re-assign a pool of works (that’s around two to three times the actual length of the set) that they might perform, which generally includes all of the present album, their greatest hits, and a load of other works. Nothing anyone wouldn’t be able to guess could possibly be performed, or enough information for a third party to disseminate a definitive set-list prior to the show.

    A writer’s music publisher needs to reassign their publisher’s share as well,
    **That’s incorrect.

    however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
    **If that clause exists in the relevant publishing agreement, then that is correct. For UK contracts, the responsibility for that clause having an impact on Direct Licencing ultimately comes down to the failure of the PRS to adhere to their requirements from the MMC investigation into them in 1996-7, where:
    42. Article 7 of the Articles of Association to be amended to allow self-administration of the live performance right.
    43. Article 7 of the Articles of Association to be amended to make it clear that members already have the right to self-administer the categories of performing rights specified in the GEMA decision.
    44. The PRS to publicize the changes to Article 7.
    As the PRS has failed to publicise Article 7, then writers (and those that advise them, managers, lawyers and accountants) were unaware what the implications of that clause was, and therefore didn’t address it in the negotiation process of their publishing deal. The intention of the MMC (and their current organisation, the Competition and Markets Authority (CMA) ) was surely not to block members from “self-administration of the live performance right.”

    Then you have questions like: What if there is an outstanding advance with the publisher?
    **With Direct Licencing, the publisher will get more money, and the advance will be paid off quicker.

    Who is going to make the royalty calculations back to them?
    **The person mandated to handle the Direct Licencing. Its a very simple and far more transparent royalty calculation than they presently receive.

    Will they even want to participate in the process?
    **So far they generally have.

    What is the local performance royalty rate applied in each territory and will a discount apply?
    **That’s a decision for the Rights Owners who have re-assigned and Direct Licencing, and of course the Rights Owners won’t grant a kickback/rebate/discount.

    What is the main versus support split?
    **That depends on whether that has been agreed with the support prior to their confirmation on the tour. Or if not, you use the existing support policy of the PRO in the territory.

    What does pro rata really mean?
    **Generally that each work has an equal weighting, and the value of that work is then shared between the Rights Owners on their agreed splits. Most PRO’s are happy with that. But as Maria no doubt knows, the PRS don’t want to agree to that, as they would prefer a less accurate, more expensive, and more administrative heavy policy, so its an ongoing discussion with them.

    What if the support acts do not want to directly license?
    **Then they don’t.

    What if they cannot (or would not be released to do so)?
    **Then they don’t.

    What if the artist wants to perform a cover?
    **Then they perform a cover. And if the Rights Owners of that cover are Direct Licencing, then that work will also be Direct Licenced. And if they are not, then that proportion of the set is not Direct Licenced (e.g. 10 songs performed, 1 is a cover, so 90% of the set is Direct Licenced, and 10% is not).

    (Exclusion needs to be total and not partial, and who is going to tell them they can’t?)
    **That’s incorrect.

    What if the artist wants to change their set list during the tour?
    **Then they change it. If they are changing it to rights that have been re-assigned, then they are changing it from one song that will be Direct Licenced, to another song that will also be Direct Licenced. And if they haven’t re-assigned the song they want to perform (and therefore it won’t be Direct Licenced), then its handled the same way as a cover (see above).

    Once on the road, it is too late to change documentation
    **That’s incorrect. It depends on 1) How long the tour is. 2) What the processing time that’s required by the relevant PRO. Unfortunately the PRS have an unreasonably long processing time of 60 days. Does the PRS really need 60 days to turn round the paperwork (when other PRO’s only need a couple of hours)?

    Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies. Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them.
    **Well no, it starts with fans buying tickets, and generating the value for the rights.

    The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist?
    **Because its obviously in their financial interest not to. Whereas the question should be, why does the PRO allow the kickback system, and if they do, why aren’t the PRO’s transparent and publish a list of the promoters/festivals in their territory, and what kickback they each receive?

    Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff?
    **Because its obviously in their financial interest to do that. The promoters are only taking advantage of an opportunity presented to them by the PRO’s.

    Why are some under-declaring box office figures to local societies – thus reducing payments to local societies/writers/publishers?
    **That would be an issue for the PRO’s to resolve for their rights.

    There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
    **Do the PROs’ mandate’s allow them to grant a kickback/discount/rebate on their members’ income? Maria, can you ask the PRS to demonstrate in their mandate from their members where it allows them to authorise affiliated PRO’s the right to grant kickback/discount/rebate on their members’ income?

    Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
    **Its interesting that Maria talks about having less opacity, as is the PRS transparent with their members? Does the PRS (or any other PRO) publish one list for their members (so the information is easily accessible) of territories with following relevant information:
    – The deductions that the affiliated PRO takes in the foreign territory on their members’ money.
    – The deduction that the PRS takes from income from the territory.
    – The support calculation in the territory.
    – The standard distribution time for live public performance rights income from that territory (from performance to being received by the writer/publisher).
    – A list of promoters from that territory, and what kickbacks they each receive.
    All information that the PRS already has and/or could get for all their members.

    What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships.
    **Is the PRS doing this (see above)? People have been asking them to do this for years.

    Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.
    **Its interesting that Maria has completely failed to highlight the benefits of Direct Licencing in terms of the writers & publishers not suffering any promoter kickbacks, but also not suffering the deductions from the PRO’s, but that they also can receive their money quicker, and receive it more transparently. So what there needs to be, is more transparency from the PRO’s.

    **So despite what Maria has written above, if you understand the process (and maybe Maria doesn’t), Direct Licencing can be pretty straight-forward, and enables the writers & publishers to receive more money, receive it quicker and receive it more transparently. And if there are any issues to address for Direct Licencing in a particular territory, those will be worked out over the next couple of years. Lets not forget, the traditional system of licencing live performances through PRO’s has evolved unchallenged over the last 100+ years. Which is why its developed in to this opaque, inefficient and expensive system that’s riddled with self-interest. Its going to take a moment to work through any issues, and implement the new and improved version of licencing live performance rights with Direct Licencing…but we’ll all get there.

Leave a Reply

Your email address will not be published. Required fields are marked *