UK venues criticise PPL tariff increase
British copyright collection society PPL has released details of its new specially featured entertainment (SFE) tariff, which will see UK businesses that play recorded music faced with a significant increase in fees.
The SFE tariff – the new version of which comes into force on 1 July 2019 – relates to the playing of recorded music in public at events such as DJ and club nights, and applies to venues, nightclubs, pubs, bars, cafés, restaurants and hotels.
While PPL says the current tariff, which has been in place since the late ’80s, specifies fees that are “too low to be an appropriate reflection of the value to businesses of using recorded music at SFE events”, those who will be paying the higher fees have suggested they could have a “devastating” effect on many entertainment businesses.
DHP Family’s Julie Tippins – who wrote for IQ last October saying a PPL fee increase could lead to the closure of successful UK venues – calls the new tariff a “slap in the face”, especially given the recommendations of the DCMS live music report, released the same day, which called for more support for grassroots venues.
“It’s obvious to us that these new tariffs do not address the issues that grassroots venues are facing and if implemented they would still represent a substantial hike in PPL charges at a time when many small venues are already facing a perilous financial future,” Tippins tells IQ. “We suggest PPL has a complete rethink, and looks towards reducing charges, and try encouraging the musical ecosystem that will provide artists for the future – rather than putting in measures that will destroy it.
“Yesterday the DCMS reported on the problems that small venues face and asked the music industry to step in and support it. This feels like a slap in the face to both the recommendations of the DCMS and venues in this country.”
“We believe that the new SFE tariff delivers a fairer return for our members”
PPL (Phonographic Performance Ltd) collects and distributes royalty monies of behalf of performers and record companies for the use of their recorded music. The SFE tariff changes include:
- 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)
- The introduction of two new smaller tariff bands, for SFE events with attendances of 1–25 and 26–50 persons, which PPL says, “in many cases”, will result in events paying less than under the current tariff
- The phased introduction of increased fees over a five-year period from July 2019, based on an initial rate of 4p (£0.04) per person per hour (up slightly from the current average of 3p per person per hour). This will move to fees based on a rate of 9p per person per hour by 2023, subject to annual indexation (ie inflation)
“I would like to thank our licensees for engaging with PPL’s SFE consultation,” says PPL CEO Peter Leathem (pictured). “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.”
UKHospitality, a trade association which represents bars, cafés, hotels, nightclubs and other leisure businesses, describes the new fee structure as a tax on music venues, and estimates it will cost the hospitality sector in the region of £49 million.
Its chief executive, Kate Nicholls, says: “The decision to introduce a new tax for music venues could be potentially devastating. This new tax will see venues hit with an average 130% increase which we estimate will cost the hospitality sector upwards of £49 million.
“extra fees such as PPL’s will only wring the last life out of venues”
“Hospitality businesses are already being bombarded with constantly-increasing costs and only today a government report highlighted the pressures being faced by music venues. The report stated that increasing costs were a major factor in the closure of venues. This additional massive cost is not going to help, it is only going to force more and more venues out of business.
“It is not just nightclubs and large venues that will be hit, either. Village pubs that host weekly discos will be strangled by the charge and there is every chance that such events, upon which many pubs might rely, will be forced out altogether.
“The UK’s music venues are some of the hospitality sector’s most exciting businesses. 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. Unless PPL rethinks this charge then they are only going to put the businesses they want to charge out of business.”
Mike Klist, of the British Institute of Innkeeping (BII)’s tells the Morning Advertiser: “The BII is disappointed by PPL’s decision to raise the tariff on the SFE licence by 130% on average. Pubs and clubs that are liable for the tariff are predominantly in the night-time economy, which is so important not only to our high streets, but also our rural communities.”
Full details of the new SFE tariff can be found on PPL’s website at www.ppluk.com/sfetariff.
Why the new PPL tariff would be catastrophic for UK music
What’s that saying: “nothing can be said to be certain, except death and taxes”.
In the live music and nightclub industry – some of the costs we have to pay to play recorded music or host live music often feel just like a tax – I’m talking PRS and PPL.
These two monopoly businesses rarely (if ever) get a good word said about them from the venues that have to pay these charges. They take our money, but they never support us – and without live music venues or night clubs, how would UK music acts ever develop into international stars?
There is no recognition from these copyright collection agencies that we are a vital part of the music industry in this country – whether we are grassroots venues, nightclubs, bars with DJs or festivals with DJ tents. We are just the magic money tree constantly paying our fees up to these monopolies, despite closures of grassroots venues across the country. The UK lost 45% of all nightclubs between 2005 and 2015, and pubs and bars are still closing at a rate of 18 per week in 2018. Ever seen PPL or PRS raising concerns or offering to help with this decline? No… me neither!
If we fail because of yet another massive increase in our running costs, it won’t just be the venues affected
And just to be clear, we and all other music venues are not arguing that we should not pay PRS or PPL; we do and will continue to support artists, bands and songwriters through paying for use of copyrighted music. This is about the amount that we are being told to pay.
In July, PPL (Phonographic Performance Limited) – which collects and distributes royalties for performers and labels when recorded music is played, as opposed to PRS for Music (the Performing Right Society), which pays songwriters, composers and publishers, including for live performances of their music – announced a review of its specially featured entertainment (SFE) tariff, which covers nightclubs, pubs and bars, cafes, restaurants and hotels.
Among other things, PPL’s proposals would include a revision of its ‘fee-per-person’ measurement, leading to proportionately higher charges for larger events. In its consultation paper, the collection society says that, “in line with PPL’s key principle of fairness, PPL believes that in a revised SFE tariff the ‘fee per person’ for all SFE events should be broadly the same, regardless of the size of the audience. This aim is easier to accomplish with attendance bands of equal size, and therefore PPL’s current thinking is that a revised SFE tariff should use consistent bands of 25 people regardless of the size of the audience.
“The fee would be set at the top of each band.”
This increase would not be economically viable for our businesses
The proposals from PPL are quite outrageous. We have calculated that for just one venue, the new tariff would increase the annual cost from just under £6,000 to nearly £60,000. The justification from PPL for this would be almost laughable if it wasn’t so potentially damaging to businesses.
They have said they have modelled that this is the amount that people would be prepared to pay for having music to dance to. At time when nightclubs have been closing at a scary rate, this clearly doesn’t add up. We know our customers and how much they are prepared to pay, and we know how business costs stack up, and this increase would not be economically viable for our businesses.
One of our trade bodies, UK Hospitality, has produced some strong arguments why these proposals are extremely damaging to an important sector of UK business – and if we fail because of yet another massive increase in our running costs (after many have faced massive business rate increases, payroll costs and, for many of us, hikes in rent) it won’t just be the venues affected.
Where will artists and DJs be playing? I suspect once again in illegal raves – and those rave organisers won’t be paying any taxes, including PRS and PPL, or making sure people are kept safe. I don’t see that as a future any of us wish for.
Julie Tippins is head of compliance for UK promoter and venue owner DHP Family, which runs Oslo, Borderline and the Garage in London, Thekla in Bristol and Rock City, Rescue Rooms, Bodega and Stealth in Nottingham.