Copyright Review Commission Report - ICT Law and Regulation ...

This provision is intended to rectify the imbalance in power that can often be the case in the negotiations between powerfulmonopoly players and significantly smaller players.7.4. COLLECTION OF MUSIC ROYALTIESCollecting societies in the UK collect large sums every year. The Hargreaves Review (Independent Review of IP and Growthavailable at http://www.ipo.gov.uk/ipreview.htm) estimated that close to £1 billion is collected annually. A report byPricewaterhouseCoopers (Music Collecting Societies. Evolution or Regulation? Assessment of Recent Proposals on theReform and Regulation of Collective Rights Management in the Music Industry, June 2005 page 11) notes that:Revenues collected in the UK are high relative to income per capita and are also reflective of the relative size of the overall music marketin the United Kingdom. The high level of revenue collected in the UK is indicative of significant ‘depth’ of collection.Royalties are typically collected by PRS from users annually. However, where appropriate, PRS collects royalties on a morefrequent basis (biannually, quarterly or monthly or per event). Collection by PRS for UK Broadcast and Online is dependenton the online licensing scheme in question and it could be monthly or quarterly depending on revenues generated.PPL works closely with The Trading Standards Office to ensure licences are taken. Each provider of an Internet musicservice that falls within PPL’s remit, such as online radio, has a licence that covers the provision of the service to anyreceiving device, with no distinction drawn between desktop and mobile devices.Collection by PRS for UK Public Performance: UK collecting societies have a monitoring team who check both thecompleteness and accuracy of reporting. PRS only collects on behalf of its members. Virtually all composers, lyricists andmusic publishers in the UK have assigned their relevant public performance copyrights to the PRS, which thus has aneffective de facto monopoly on the grant of licences for copyright music in the UK. PRS derives its income principally from itslicensing activities. It deducts administration costs and then passes on royalties to its members in accordance with its ownrules of distribution. PRS has reciprocal arrangements with similar collecting societies in most countries.7.5. DISTRIBUTION OF ROYALTIESPRS derives its income principally from its licensing activities. It deducts administration costs. Article 48 of the PRS foundingdocuments permits certain deductions from the amount collected for distribution for pension and benevolent fund purposes.These amounts are set out in the PRS Report and Accounts made available to Professor Pistorius. The remainder of thefunds is then distributed to its members in accordance with its own rules of distribution. PRS has reciprocal arrangementswith similar collecting societies in most countries.In the 1995 MMC Report (Monopolies and Mergers Report) it was noted that the distribution to members should be improved.The Report noted that the collecting society must be clear about the distribution to members and the system must beconstantly benchmarked. It is important to note that Professor Frank Kelly of Cambridge University developed a complex setof algorithms for the determination of music use within an industry and an area. For example, the Cambridge University- 159 -