Changes to music licences
Hall committees will, in most cases, need to ensure that they have a Premises Licence or Temporary Event Notice from their local authority. This briefing covers music copyright licensing only.
Over the past couple of years, ACRE and Community Matters have kept their respective members up to date with changes to the law that will allow PPL UK to collect licence fees from charities and others for playing recorded music from January 2012. Negotiations with the music licensing bodies took place and disappointment that PPL only made what were considered modest concessions was expressed. ACRE is encouraging hall committees through the Rural Community Action Network to raise awareness with their MPs of the current situation and in particular that for small halls the tariff is unaffordable including the fact that the VAT is irrecoverable, that the licence fees are collected jointly but there are still two tariffs and that in many cases the tariff is not proportionate to the amount of music played in the hall.
This briefing provides more detailed information on the licence fees payable from January 2012 and how it may be possible for hall committees to keep those fees as low as possible.
Music licensing bodies
There are two music licensing bodies:
- PPL UK licences the playing of sound recordings with the royalties going to the artists, performers and recording companies.
- PRS for Music licences the public performance of musical compositions with royalties going to the songwriters, composers and music publishers
The change in the law means that in future PPL will licence community buildings and will not licence the activities that take place within those buildings separately (unless they are commercial activities).
Community Matters PPL Scheme
Please note that some rural halls may have joined Community Matters own PPL Scheme and they should therefore be aware that this has been extended. Community Matters advise:
“Some years ago, PPL granted permission to Community Matters to operate a reduced fee scheme for those buildings that have always required a PPL licence. They have allowed us to extend the scheme until December 2012 for those organisations that are currently part of the scheme. For most organisations this will be a cheaper option than the standard fee. Current members of the scheme should have by now received a letter detailing their options”.
No licence required
Most halls will require one or both music licences and it is rare that this is not the case. However, halls require no music licences if:
- no music is played
- the only music played is any or all of the following:
- through a jukebox (which has its own licence)
- at private functions (weddings, birthdays, christenings)
- live performance of music that is out of copyright
- specialist copyright free recorded music
- for sacred worship
- wedding ceremonies, civil partnership ceremonies, civil ceremonies, religious ceremonies
- for Medical Music Therapy
Halls require no PPL UK licence if only live music is performed, but not recorded music.
Halls require no PRS for Music licence if no live music is performed and sound recordings played do not include music still in copyright.
Fees
- PRS for Music have a Community Buildings tariff and charge 1% of ‘defined income’ to the building with a minimum payment of £42.
- PPL UK will be changing its licensing procedures from January 2012 and agreed the following modest concessions as a result of negotiations with ACRE, Community Matters and other partners:
- That they will operate a ‘joint’ licensing scheme with the two fees collected by PRS for Music in a single transaction.
- That in future they will also licence the community building and not the activities within it using the same tariff as PRS for Music.
- Their fees will also be 1% of defined income to the building but where the defined income is less than £10,000; there will be a flat-fee of £42.
- That the tariff will cover the building and the land surrounding it and any vehicles operated by the organisation.
Music
Music includes recorded music, live music, synthesized music that is still in copyright, public use of a TV, public use of video games or computers that play sound or music, telephone systems that play music while on hold, public playing of other sound recordings.
Community Buildings tariff (tariff CB)
Community buildings for the purposes of this tariff are defined as “Community buildings run by voluntary organisations such as community centres, village/memorial/parochial halls, separate church halls serving the community at large, women’s institutes, welfare institutes and comparable premises”.
It doesn’t include the following types of buildings, each of which would require a different tariff:
- buildings used by sports clubs
- charity shops
- buildings run by statutory bodies (including Parish Councils)
ACRE and Community Matters would advise Parish or Neighbourhood Councils running community buildings to make a case directly to PPL and PRS that they should be included in tariff CB.
Tariff CB only applies to buildings with a maximum ‘defined income’ of £50,000. PRS have said that they will review this limit in 2013 as it hasn’t increased for some years. In practice, PRS have allowed buildings with a higher income to register under tariff CB but we have been advised that once they have reviewed the limit, they will apply it much more strictly, with transitional arrangements for those above the limit that have nevertheless benefitted from the tariff.
The licences will cover all activities within the building except:
- Music events with a ticket price of £20 or more, which may need a separate PPL licence referred to as Specially Featured Entertainment (SFE). PPL is currently consulting on SFE and has provisionally decided that it will limit the scope of any separate licensing of such events.
- Any hiring to commercial organisations and individuals earning an income from providing the activity such as commercial aerobics classes, Slimmers World etc where the profit does not go entirely to the voluntary organisation. In these instances it is the responsibility of the operator of the hall to ensure that the person/organisation has a relevant PPL licence in place as they can be held liable under law for any unlicensed usage in their building. Hall committee’s should have a clause in their hiring agreement to this effect, and should draw it to the attention of any commercial hirers and should satisfy themselves that the hirer has a PPL licence. PRS does not licence individuals
Defined income
Defined income is not always the total income of the organisation. The definition used by PPL and PRS is “door takings and similar takings of the host voluntary organisation (the community association or management committee); hiring charges received from hirers of the hall (but not the door takings of those hirers if retained by them); subscriptions; and the net contribution from food and bar takings where they accrue to the voluntary organisation”.
It doesn’t include the following types of income:
- Grant income (capital or revenue)
- Gifts, donations, legacies or bequests
- Interest earned on accounts
- VAT
Income in these categories should be deducted from the total income to calculate the amount of the licence fee.
PPL and PRS will verify the calculation of defined income by asking for the hall’s annual accounts, but have said that they accept them at face value.
Top tips on minimising your costs
It is suggested that hall committees spend a bit of time calculating the fee that the committee will have to pay to PPL and PRS as with a little care, this can be reduced substantially. ACRE and Community Matters make the following recommendations:
Tariff CB applies to the community building income rather than the income of the organisation as a whole. Any income to the organisation that is separate to the community building or the activities that take place there should be deducted when calculating ‘defined income’.
The PPL and PRS guidance says ‘net income from bar and food takings’. Net income means the surplus or profit from that activity after associated costs, (such as stock) is deducted.
If a separate bar, social club, café or similar business is operating within the building or area managed by the main organisation, the separate company would require its own licence, (on a different tariff). If this separate company is wholly owned by the organisation, (such as a trading company), then the organisation can deduct rental income or other funds paid by the company from its calculation of defined income.
- PPL and PRS guidance does not mention contract income. In many instances contracts have replaced grants from public bodies, (which are exempt). Contract income is usually treated as restricted income and organisations cannot spend this on items that are not part of the contract. If the contract does not include a budget for music fees, (perhaps because it is for activity that does not include music) it cannot be used to pay those fees. In these cases, contract income can be deducted from the calculation and a case made to PPL and PRS about why this is appropriate.
- Where hiring to a commercial hirer who already has a licence, we would suggest contacting PPL and PRS to seek permission to deduct their hiring fee from the calculation (for the PPL licence but not the PRS licence) so as to avoid a double funding situation.
- Several companies offer a variety of copyright free recorded music suitable for background or different occasions that is outside the scope of the licence fee operators and for which a licence would not be required. You may wish to consider whether such offerings would meet all your music needs.
- PRS operate a Community & Charity Events Discount Scheme as part of their Corporate Social Responsibility programme. They can give discounts ranging from 10% – 100% for special events e.g. one off fundraising event such as Round Table Fire Work Display. In 2010 they discounted 250 events and more than 300 in 2011. There is no fixed budget and each event is assessed on merit.
- PRS will offer an instalment scheme for the fees for both licences. The scheme is interest free and available to any organisation, with payment usually in 3 instalments. This is granted on request following a telephone conversation.
- If the total defined income is a little above the £50,000 limit, then we suggest hall committees still apply under tariff CB until 2013 when PRS will be reviewing the limit and applying it more strictly.
- PPL can issue one-off licences for specific events or activities and this may be cheaper for organisations that have a limited number of licensable events.
Our grateful thanks to Community Matters for sharing information with us.
