The UK’s Intellectual Property Office has announced a plan to amend copyright law so that more foreign performers can earn equitable remuneration when their recordings are broadcast or performed in the UK.
ER refers to the payments performers receive, under law, when recordings on which they appear are broadcast or played in public, which is administered by collecting societies like PPL.
Some foreign performers don’t currently get any ER from UK airplay or performances, and the IPO plans to change that. However, the changes are not as radical as previously proposed, meaning fewer foreign performers will newly qualify for ER, with those appearing on tracks released by US labels not automatically benefiting.
That’s because, the IPO says, the more ambitious plan that was originally proposed would hit UK label revenues more significantly than the government agency had anticipated.
Based on input from labels, the IPO now estimates that basically allowing all foreign performers to earn ER would “reduce UK record labels revenue by £7.4 million per year”, which “equates to an approximately 5.3% reduction to UK record label annual profits”.
That reduction, argued the labels, would impact on their “abilities to invest in new British music and artists” and “less investment by UK record labels could undermine the quality or quantity of British music enjoyed by the public”.
This all relates to money generated by the broadcast and public performance of recorded music, which in the UK is managed by collecting society PPL.
That revenue – also often referred to as ‘neighbouring rights’ income – is shared between whoever owns the copyright in a recording and the performers who appear on it.
The owner of the copyright in a recording is often a record label – referred to, somewhat confusingly, as the ‘producer’ in law – while the performers are all the artists and session musicians who appear on the track. The slice of the neighbouring rights income that goes to those performers is known as performer equitable remuneration, or performer ER.
PPL collects this income from UK broadcasters and businesses with public performance licences, like bars and shops, and then pays it through to the relevant labels and performers.
If a recording was recorded and released in another country, PPL still collects the money and then passes it onto other collecting societies around the world which pay the relevant labels and performers.
Those collecting societies will also pass a chunk of the money they collect back to PPL when broadcasters and other businesses in their country broadcast or play UK recordings.
However, there are some countries where, because of restrictions in copyright law, money isn’t generated when recorded music is broadcast or performed. That includes the biggest music market of them all, the USA, where only online and satellite broadcasters have to pay any royalties.
This poses the question: if country X has broadcast royalties and country Y does not, should country X still pass money over when music from country Y is broadcast or performed, even though there are no equivalent royalties to flow in the other direction?
Some copyright systems answer that question “no”, applying what is called the ‘reciprocity’ approach. So no royalties would flow to labels and performers in the US, because no royalties are flowing back from that market.
In the UK, the relevant rules on this differ for labels and performers, meaning that generally royalties do flow to foreign labels but not to foreign performers in countries where there are no reciprocal payments.
The IPO decided that that inconsistency was possibly in breach of international treaties that cover all this stuff and therefore undertook a consultation on how the rules might be changed in order to comply with international obligations.
One proposal was to expand payments so that whenever a foreign label qualifies for payment, any performers who appear on that recording would qualify too. The logic was that, under the current system, all the money is flowing to a foreign label, so if some of that money instead flowed to foreign performers, the UK record industry wouldn’t really be affected.
There was some support for that approach within the UK music community, especially from creator and performer groups, and some smaller indie labels. Says the IPO, they argued that “existing UK law is unfair to the performers who do not qualify and incompatible with the treaties on copyright”, and that paying ER through to all foreign performers would be “the simplest, clearest and fairest way of resolving this”.
But other labels argued that that proposal would have a negative impact on UK record industry revenues. The IPO explains, “some UK record labels are affiliates or licensees of foreign (especially US) record labels, and they administer certain rights in the UK on behalf of those foreign record labels”.
These UK affiliates, it goes on, “commonly retain a ‘significant and material’ share of the revenues that are nominally attributable to foreign rightsholders”.
If an increased portion of those revenues were to instead flow to foreign performers via their collecting societies, “this would mean a reduction in the revenues retained by these UK record labels. In turn, these respondents say, this could mean less investment in British artists and music”.
To that end, the IPO is now proposing a compromise approach. Some foreign performers will newly qualify for payment, but only where “the producer of the sound recording of their performance is a national of the UK or certain other countries, including any country that is party to the Rome Convention”.
The Rome Convention is one of the big copyright treaties and is signed by lots of countries but, crucially, not the US. Had the IPO’s original proposal gone ahead, it seems likely that a significant portion of the new performer payments would have gone to the US, meaning this new proposal will have a much smaller impact on UK labels that act as affiliates or licensees of foreign labels.
Quite how this will all work in practical terms is still to be determined. The IPO says the changes will be made through secondary legislation under the Copyright, Designs & Patents Act.