COPYRIGHT, MUSIC AND EXEMPTION

A government review of copyright exemptions for playing of recorded music may force some not -for-profit bodies to turn off the TV, radio or CD player.

They and charitable bodies may soon decide that silence is golden if the repeal of current exemptions means they will have to cross the palm of Phonographic Performance Limited (PPL) with silver before they can play recorded music in public.

The Intellectual Property Office (UK-IPO), formerly the Patent Office, closed its Consultation on Changes to Exemptions from Public Performance Rights in Sound Recordings and Performers’ Rights on 31 October. If not-for-profit bodies or rightsholders (and their advisers) missed the deadline for responding, there may still be a chance to have a say- the UK-IPO proposes to hold a series of meetings on the issue later this year in its offices in Newport, Wales and London with meetings in Scotland and Northern Ireland also a possibility.

Currently, anyone who wants to play or perform a recording of music in public must first obtain a licence to do so, unless an exemption applies. Public playing and performance covers virtually all playing of recordings outside a domestic setting.

A recording of music will contain a number of copyright works. There will be copyright in the music itself (as a musical work - first owned by the composer), copyright in any lyrics (protected as a literary work- first owned by the lyricist) and copyright in the sound recording (first owned by the producer,usually a record company)). In addition the musicians and vocalists who performed on the recording will have performance rights in the recording.

Copyright owners have the exclusive right to play or perform their copyright works in public. Therefore, anyone wishing to play or perform a substantial part of a copyright work in public must obtain the consent or licence of the copyright owners unless one of the statutory exemptions set out in the Copyright, Designs and Patents Act 1988 (CDPA) applies.

It would clearly be inconvenient for both the owners of copyright works and those wishing to license their use if licences had to be negotiated on an individual basis, so organisations have been set up to administer licences and collect income on behalf of the copyright owners. In the UK, PPL administers licences and collects income for the playing and performance of sound recordings and performances and the Performing Right Society (PRS) administers licences and collects income for the playing and performance of the music and lyrics embodied in the sound recording.

The practical effect of this is that anyone who wants to play recorded music in public will need to obtain a licence from PPL and the PRS unless an exemption applies.

Not-for-profits that profit

Currently, charitable and not-for-profit bodies benefit from an exemption to obtain a licence from PPL in respect of their use of recorded music (though they are still required to obtain a licence from PRS).


Section 67 of the CDPA is available to a club, society or other organisation if that organisation is not established or conducted for profit and its main objects are charitable or otherwise concerned with the advancement of religion, education or social welfare subject to certain qualifications. Any profits from the use of the music must be used for the benefit of the organisation and the person playing the recorded music must not derive commercial benefit from doing so.

Section 72 applies where a broadcast which contains a sound recording is played in public in a location where no admission has been charged for entry. Broadly, where the broadcast contains recordings of music this exemption is only available where the use forms “part of the activities” of the not-for-profit organisation. The example given in the consultation is of an NHS hospital which has a television or radio playing in a day room for the benefit of patients.

Corresponding exemptions in relation to performers’ rights are set out in paragraphs 15 and 18 (1)(A)(a) of Schedule 2 to the CDPA.

Copyright law seeks to strike a balance between the interests of rights holders and society at large (the rights users). It seeks to encourage and reward creativity by allowing copyright owners to exercise exclusive rights in their works for a limited period of time (currently 70 years from the death of the author for music and lyrics:for sound recordings, 50 years from the making of the recording). However, public policy dictates that in return for these exclusive rights access to copyright works should be permitted for certain socially desirable purposes.

The consultation states that PPL has argued that its members are entitled to remuneration from organisations currently exempt from paying licence fees and that the exemptions are in breach of article 8 (2) of the Rental and Lending Directive (which requires member states to provide a right to equitable remuneration for copyright owners of sound recordings and performers when commercially produced sound recordings are communicated to the public). To date the government has taken the view that the exemptions (as amended over time) are permissible under the exceptions permitted under the directive.

Conversely, some small organisations find it difficult to comprehend why they are obliged to obtain licences from PRS and/or PPL for the very limited use they make of music.

New Proposals

The UK-IPO is seeking comments on the following three options:

1. Repealing the exemptions so that charitable bodies and not-for-profit organisations would need to apply for a PPL licence as well as a PRS licence for the playing or performing of sound recordings in public;
2. Narrowing the scope of the exemptions so that they are only available to small charities (the proposal is to define small charities as those whose turnover is less than £20,000 a year) but at the same time extending the scope of the exemptions so that they apply to PRS licences as well as PPL licences;
3. Repealing the exemptions and providing that use should be subject to the payment of “equitable remuneration”. This differs from option1 in that sums due in respect of a right to equitable remuneration are likely to be lower than the licence fees which can be demanded from a copyright owner who has exclusive rights. Another distinction is that a rights holder with a right to equitable remuneration rather than an exclusive right may not refuse to licence rights though in practice it is difficult to think of many situations in which a licence would be refused by an exclusive rightsholder.

Winners and Losers

It is clear that PPL, its record company members and musicians and vocalists stand to be the winners from any changes in the law. All of the three options above mean that PPL will be able to collect income from licensing uses which are currently exempt.

Whether option 1 or option 3 is adopted, charitable and not-for-profit bodies will find themselves having to pay PPL as well as PRS for the use of music. And while option 3 holds the promise of potentially lower fees the question of what will constitute equitable remuneration is likely to raise more problems than it will solve. Those seeking to licence rights need to have certainty as to the fees which will be payable. Given that one of the objects of this exercise is to remove the anomaly between the treatment of copyright in recordings and copyright in the underlying music and lyrics it seems odd that option 3 seeks to address this by providing for a lesser right (to equitable remuneration) in respect of sound recordings than the exclusive rights conferred on the copyright owners of the music and lyrics embodied in them.

Option 2 provides a window of opportunity for small charities to free themselves from the cost and administrative burden of obtaining licences from PRS or PPL, and would clearly benefit those who currently obtain a PRS licence at the expense of the larger charities. For this very reason it is unlikely to be popular with PRS.

Maintaining the status quo is, interestingly, not listed as an option. It may seem inconsistent that exemptions are permitted for sound recordings where they do not apply to the music and lyrics embodied in them but when you consider that PPL represents the interests of the major record labels whereas PRS collects income on behalf of composers/songwriters it is not difficult to understand why, in economic terms, the exemptions could be justified with regard to PPL. However, the exemptions in respect of performers’ rights which are administered by the PPL are difficult to justify in those terms – might it have been possible to maintain the status quo whilst providing for a right of equitable remuneration for performers? This may be less costly but would still involve a payment to PPL which collects the income on behalf of performers.

Will the youth club's radio be switched off? Will the church playgroup have to manage without its CDs? One thing is sure – charities and not-for-profit bodies and rights holders alike should not lose the chance to have their say.

Pamela Forte manages media and entertainment law boutique practice, Forte Law, has lectured on copyright and music industry contracts at Newport College of Art, Media and Design and is a member of The Voting Academy for the Brit Awards 2009.

This article was first published in The Law Society Gazette in November 2008 and reflects law and policy at that time.