PRS Showdown Delayed

PRS For Music has probably delayed a showdown with UK promoters by giving them longer to respond to what looks like its bid to hike the rate it charges for live shows.

The UK royalty collection agency wants to increase the rate it levies and look at extending the charge to cover other revenue streams such as sponsorship, merchandising and even the value of guest passes.

The consultation period on the rate increase will end Dec. 31. It was originally to end Sept. 7, but has already been delayed once because many promoters were busy with summer festivals.

Festival Republic head Melvin Benn has blasted PRS for “opportunistic money-grabbing” and Live Nation international chief ops officer Paul Latham called the collection agency “the biggest bounty hunter in the business.” The reality is the UK promoters may only be following their German colleagues in a damage-limitation exercise.

In Germany – where the rate rise issue is further down the line – the country’s major promoters’ association (BDV) has already accepted it will need to pay a higher rate, although not as much as the 10 percent across the board that collection agency GEMA wanted.

At the end of last year, both sides managed to get around a table to thrash out a compromise based on what the German arbitrary court advised at the end of November.

The upshot was the BDV (formerly IDKV) did at least get GEMA to reduce its demands.

However, the new basic rates are still nearly double the 3.86 percent German promoters were paying on larger shows and almost four times the 1.87 percent they were paying on smaller ones.

The main concession the promoters won was in the smaller show bracket that goes up to 2,000 capacity. For these, rather than pay the 10 percent GEMA wanted to charge, they have negotiated a rise to 3 percent this year and an increase by annual increments to 5 percent in 2014.

The German rates are made more complicated by the fact promoters that belong to either association – the BDV or the VDKD – are entitled to a discount, depending on how many shows they promote each year.

In the UK, the longer consultation period means PRS isn’t near to talking numbers, but there have been earlier hints that it’s also looking at raising the levy to 10 percent.

Like the Germans, UK promoters are under some pressure to reach an agreement or face the prospect of having one thrust upon them.

BDV chief Jens Michow admits his members were negotiating under pressure from the German arbitrary court, which had threatened to hand the matter over to the High Court of Munich if it couldn’t be resolved.

If the UK promoters can’t agree on a new tariff, then it will be settled with the help of the Copyright Tribunal.

Although neither side would want the cost of any sort of court battle, PRS – like GEMA – would be more pleased with the likely outcome. It can argue that the current rate of 3 percent of ticket receipts was last reviewed in 1988. Many mainland European countries now have rates as high as 10 percent.

PRS can now also use Germany, where GEMA had a similar tariff, as an example of another country that’s upped its rate nearer to the pan-European average.

If the UK and German promoters are comparing notes on their almost parallel situations, their most useful strategy may be to swap ideas on how they’re going to block royalty rates applying to a wider range of revenue streams.