While it might not be the most exciting game in town, it is instructive to compare the remits of the UK's music collection societies. A Venn diagram would place PRS in the middle. It overlaps with PPL in that it is concerned with the performing right: the income that is derived from the licensing of music to public premises and broadcasters. However, whereas PRS collects this money for songwriters and publishers, PPL collects this money for performers and record companies.
MCPS overlaps with PRS because it has the same constituency: songwriters and publishers. The money that MCPS collects on their behalf comes from the mechanical licensing of music: the copyright income that arises when songs are reproduced in recorded form, whether this be the sale of physical formats, the broadcast of recorded music on radio and television, the online reproduction of recorded music, the synchronisation of recorded music with moving images or various lesser categories, such as the mechanical reproduction of music in greetings cards. There is no mechanical collection society for performers and record companies. The distribution of money from these sources is something that record companies handle themselves.
It is appropriate that MCPS and PPL sit at the margins of a Venn diagram, as they collect less money than PRS. I have written elsewhere about one of the crucial monetary differences between PRS and MCPS. Songwriters and publishers assign the performing right to PRS. The collection society therefore owns this right and collects income from all performance uses. MCPS, in contrast, merely administers the mechanical right. Its members can opt to self-licence the use of their music for films, adverts and some TV broadcasts. Many chose to do so, as the fees that they can extract will be larger than can be derived from MCPS’s blanket licences.
Another crucial difference between PRS and MCPS is the way that money is distributed to songwriters. The standard arrangement at PRS is that 50% of royalties go directly to the songwriter, while 50% of royalties go to the publisher. The songwriter might also receive a share of the publisher’s 50% of royalties: a common deals are for total income to be split 75/25 or 80/20 in the songwriter’s favour. There is nevertheless a difference between the 50% that is paid directly to the songwriter and the 25%-30% of their income that PRS distributes to the publisher. The 25%-30% can be used to pay off the publisher’s advances; the 50% cannot. When it comes to mechanical royalties, a songwriter will enjoy a similar 75/25 or 80/20 split. MCPS distributes its income directly to the publisher, however. Consequently, the entire share that is due to the songwriter can be used to pay off their advances. A songwriter will not receive any mechanical income until these advances have been recouped.
PPL has similarities with both societies. In response to the European Union’s Rental Directive, it elected in 1996 to distribute 50% of its income directly to performers and 50% to record companies. Here the society parallels PRS in that the artist’s share is safeguarded: it cannot be used to recoup record company advances. This is enshrined in law. In 1996 an amendment was made to the Copyright, Designs and Patents Act concerning the ‘right to equitable remuneration for exploitation of sound recording’. The amendment states that where a recording is ‘played in public’ or is 'communicated to the public' then this performance right ‘may not be assigned by the performer except to a collecting society for the purpose of enabling it to enforce the right on his behalf’. Crucially, this means that artists are not permitted to sign over the performance right in their recordings to their record companies. There is, however, one exception to the 'communication' provisions. Keen readers of updates to the 1988 Act are referred back to the earlier clause 182CA(1), which covers 'electronic transmission in such a way that members of the public may access the recording from a place and at a time individually chosen by them'. This is the 'making available right', which was added to copyright law following the WIPO Treaties of 1996. The electronic transmission being referred to here relates specifically to the online delivery of music. In this sole area of 'communication', performers are not entitled to 'equitable remuneration'.
Reflecting this state of affairs, the majority of online income falls outside of PPL's remit. The society’s Annual Review for 2011 states that:
PPL’s online revenues remain limited as the majority of online sound recording licensing is carried out directly by rights owners. This reflects the prevailing view of record companies that downloading and on-demand streaming is analogous to the distribution of sound recordings, a traditional record company function.
Their 2012 Annual Review states:
The scope of PPL’s online licensing rights remains largely limited to online radio, and income from this sector showed further growth in 2O12, albeit from a modest base. The majority of online usage of sound recordings is directly licensed by rightholders and PPL maintains a regular dialogue with its members as to the appropriate extent of PPL’s online licensing.
And in 2013:
The number of small online radio broadcasters licensed by PPL continued to grow, facilitated by the introduction of ‘self-service’ online licensing functionality on the PPL website. Revenue growth from such licensees however, was offset by a decline in revenue from the larger online radio services licensed by PPL, where the market has moved to more interactive online services licensed directly by rightsholders.
The latest Review, for 2014, tells us:
Overall growth in Broadcast & Online licensing income of 1% was delivered in 2014. This was achieved despite increased competition from new online services, which are largely licensed directly by PPL’s members.
What do record companies have to gain by regarding downloading and streaming as analogous to the distribution of sound recordings, on the one hand, or being classified as part of the 'making available right', on the other? First, it means that this income goes directly to the record companies rather than to PPL. Consequently, the money that is due to artists is not safeguarded against their advances: it will instead be used to recoup them. Secondly, it means that the record companies do not have to abide by PPL’s 50/50 rules for splitting income equitably with performers. Recording artists are, in fact, receiving a far lower percentage of online royalties than this. You’ve probably heard about the fuss they’re making.