PaidContent UK: PRS Slashes Streaming Music Rates; YouTube Still Negotiating

By Robert Andrews – Tue 26 May 2009

Good news for cash-strapped online music services. Royalty collector PRS For Music has bowed to websites’ pleas for smaller charges, more than halving its on-demand streaming music rate from £0.0022 to £0.00085 per track, effective July 1 and lasting for three years.

PRS has effectively heeded sites’ argument that the music biz can make more money overall from the growing number of new online services if it drops its rates. PRS said the move “reflects the changes that have occurred in this part of the digital marketplace since the Copyright Tribunal’s 2007 decision”. Its online and broadband MD Andrew Shaw: “As new entrants join the market and existing providers expand, music creators will reap the rewards by sharing in the success that their talent is generating.  This is a good deal for music creators and for music lovers.”

It comes as PRS authors its new Online Music Licences, replacing its two-year-old Joint Online Licence. This means the collector is holding on to the principle that artists deserve to be paid every time their work is streamed, but it will benefit sites like We7 and YouTube, which have complained about excessive rates, now that their services are taking off and their ad-funded models are proving challenged. The rates for download services, on-demand subscription services and subscription-funded webcasters were unchanged when revised earlier this month.

On the flip side, however, the headline rate will increase from eight percent of a website’s revenue to 10.5 percent. Sites pay either the revenue percentage or a per-track fee, whichever total is greater, so the bigger sites end up paying per-track. The headline increase could make it slightly more expensive for the newest of startups, which may not yet have amassed millions of streams, and will also hit the bigger services if they ever reach a tipping point where a tenth of their income becomes more than the total per-track outgoing.

—We7 CEO Steve Purdham, who had complained about existing rates, told paidContent:UK: “On first glance, this looks like a good step in the right direction and it is pleasing to see that the PRS has listened to many of the consistent views from the consultation period. It is these minima which significantly affects the evolution of new digital businesses and the PRS have done a good job in going some way to address this problem.”

—imeem adviser and ex chief marketing officer Steve Jang said the rates are “finally recalibrating with reality, but is it enough?”.

—Updated: YouTube’s UK spokesperson told us: “We welcome any efforts to make licensing costs more realistic, but as we’re still in discussions with the PRS to agree license terms for YouTube we’re unable to comment further.”

Posted by Ted • Tuesday, May 26, 2009 .