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<DIV><FONT size=3 face=Calibri>Spot on Ian! </FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>What is really galling is that PPL justify their
substantial minimum raes (as opposed to proportional to use) by saying that it
is necessary to cover administration costs with the smallest stations. In other
words they are saying that most of the royalties paid by the smallest stations
do not in fact go to the artists and record companies, but in fact are spent on
PPL admin overheads! Although they are a 'not for profit' company like all of
us, they do still maintain a large staff with well paid senior management (the
top earner gets over £0.5 million annually), legal teams etc, who are paid
for before remaining monies are distributed to rights holders. </FONT><FONT
size=3 face=Calibri><FONT size=3 face=Calibri>Overall PPL (for which I have
figures) spends 15% of its gross income on overheads, but I would guess that in
the not-for-profit sector this proportion is nearer 80%. </FONT></FONT></DIV>
<DIV><FONT size=3 face=Calibri><FONT size=3
face=Calibri></FONT></FONT> </DIV>
<DIV><FONT size=3 face=Calibri><FONT size=3 face=Calibri>Also last year PPL
reported a £1m increase in revenue from radio broadcasters, despite by their
figures, an 8% fall in commercial radio revenues. Also, for some reason they
exclude the costs of their defined benefit pension scheme when calculating
overheads.</FONT></DIV>
<DIV>
<DIV> </DIV>
<DIV>PRS recorded around £15m increase in income over the same period of
industry downturn, however it's overhead costs are lower, at around 10%, and it
boasts of being "one of the world’s most efficient combined rights collecting
operations". </DIV>
<DIV> </DIV>To take some round figures to put this into perspective, a
typical broadcasting licensee has a minimum charge of around £600 and there are
around 200 very small licensees who are likely to have genuine proprtional use
more like an average of, say, £100. Those figures would mean PPL is costing
the sector £100k per year in admin overheads that simply go to pay for staff to
collect the money, while only £20k is passed on to rights holders. </FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>Not a very efficient system, to say the least,
and a substantial drain on the community sector, and that's just for one
collecting body. Those are conservative estimate figures - the total efficiency
waste for the whole non-profit sector across all three royalty collectors,
including web stream royalties, could easily mount up to as much as the
entire annual Community Radio Fund!</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>The royalty bodies are really able to maintain
their present position only because they have the financial backing to stand the
legal costs that would be involved in arguing the case before a Copyright
Tribunal (which is the legal arbiter on what the royalty collectors can
do), so the small stations (and even not-so-small) are not in a
financial position to challenge them.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT><FONT size=3
face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>It is legally open to the user of any copyright
works to declare that they are not being offered a realistic licence by the
collecting body, and to deem their own reasonable rate of payment pending an
application to the Copyright Tribunal (that's simplified, but is the basic
provision in law). But of course there are high stakes in that for an individual
station, and most of us would be financially broken by a week's legal costs if
awarded against us. </FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>Three years ago, after a year of negotiation
was getting nowhere fast, we told one copyright body we were going to
go down that route, but before we got to formal legal procedings they came
up with a compromise offer that suited us reasonably well at the time. I suspect
that despite the potential threat of legal costs, they equally knew that the
case could have brought them adverse publicity and set a precedent for other
stations.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>PPL is well known for doing nothing to
minimize the legal costs that are racked up. So much so that in one case in
which their case was accepted, the Tribunal ordered them to pay
the 'losing' parties' costs anyway because the Tribunal recognized that PPL
had unreasonably racked up the legal costs by various tactics.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>If the whole sector stood together with joint
financing of an action, or the CMA performed that function with the formal
backing of the sector, a case could be taken before the Tribunal and I think it
would stand a high chance of winning, but of course the stakes are still
high.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>I would prefer to see CMA do for non-profit
stations what the RadioCentre does for the (notionally)profit-making stations'
MCPS payemnts. The RadioCentre pays MCPS a total figure for all
its members, based on the total music usage across the board, and then
passes on the costs to its members in strict proportion to their TSAs (it could
possibly be done more fairly in proportion to income, but that would add a large
admin overhead in cllating the figures). Doing this means that a very small
community-based stations pay typically only £50-150 a year, while the big
commercial stations pay a fair share.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>This would destroy the royalty collectors'
defence of their high minimum costs as they would now have the overhead of
dealing with only one body for the majority of the sector. This would cost
more than administering one station, since there would need to be some auditing
checks etc, but the costs would be a tiny fraction of the costs they claim in
administering several hundred stations individually, and the individual stations
should on average see a several-fold reduction in their fees.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>I think CMA should offer to take on this role, or
if it is unwilling, they not-for-profit sector could set up its own aggregating
body to handle this (and if successful, it could potentially develop to other
things in future - such as group insurance schemes, or even advertising sales).
CMA already has to do membership admin and could handle the PPL/PRS payments in
the same as RadioCentre does with MCPS - simply adding the proportional charges
to the annual renewal invoices, with automatically calculated amounts requiring
little admin overhead. </FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>This should also benefit CMA and sector cohesion
as stations would see a direct financial and admin benefit from CMA
membership in addition to all the more nebulous lobbying and education
work. In the case of RadiCentre, membership for smaller commercial
stations is cost-negative because of the savings they make in MCPS fees by
paying a proper proportional amount instead of an individual minimum fee-based
amount.</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>That's my pennyworth, anyway (or potentially £1m
pound's worth if our sector got its act together!)</FONT></DIV>
<DIV><FONT size=3 face=Calibri></FONT> </DIV>
<DIV><FONT size=3 face=Calibri>Alex</FONT></DIV>
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