I am grateful for the opportunity to raise in the House an issue that has given cause for concern, especially to small businesses and voluntary organisations in my constituency.
The debate on performing rights licensing is timely in that it follows hard on the heels of the closing date of the music licensing review consultation. Perhaps I should begin by explaining the role of the Performing Right Society. It is primarily to raise money by licensing playing or using music by collecting fees and distributing them through royalties to the musicians responsible for writing and publishing the music that we all enjoy in the UK and worldwide. Given that 90 per cent. of the Performing Right Society's members earn less than £5,000 in royalties a year, most of us would say that obtaining funds from those licences is reasonable. At least nine members of the PRS are based in my constituency, and the wider south-west is blessed with prolific and successful artists and writers.
It is therefore right that the PRS should look after the interests of its members by collecting the royalties they are owed. The creators of music should be protected by a law, which provides that others cannot use the product of their labours for free. Indeed, most of the small businesses that have contacted me have pointedly made it clear that they do not begrudge those people seeking recompense for their valued work.
The PRS can charge for virtually all the songs played on the radio and TV, on CDs and online. There are alternatives, however, and companies such as Fresh Air Studios—which is based in Plymouth—can source music for corporate productions that is exempt from PRS. By law, under the Copyright, Designs and Patents Act 1988, if someone uses music in public, they require permission, unless the music is PRS-exempt.
So, how does the PRS collect the licence fees? It continually contacts businesses across the UK to help them understand the need for a PRS music licence, and more than 100,000 businesses were contacted in 2007. Some 350,000 businesses across the UK currently have PRS licences. However, it is that collection process that has caused businesses to lobby me. In the light of their concerns, I met representatives of the PRS yesterday to discuss the matters raised with me and to listen to their position ahead of today's debate.
Some of the issues that had been drawn to my attention included the methods used to target small business owners who may not even require a licence; the implications of the cost of the licence for small organisations and businesses; the lack of clarity in the process; and the lack of information about alternative sources of music.
I am grateful to my hon. Friend for raising this important matter. I should declare an interest as a member of the world's only parliamentary rock band, MP4, although we do not necessarily put PRS or PPL to very much use. In any case, I welcome the balanced approach that my hon. Friend is taking to the debate and I am sure that she appreciates that the PRS and PPL are an important source of income for many songwriters, composers and performers. As she will know, a small business can get a PRS licence for about £1 a week, which gives it access to some 10 million songs for a year, representing excellent value for money.
I thank my hon. Friend for that contribution. Like many colleagues, I have enjoyed the music of MP4 live, and I know that members of the band write its music in the little spare time that they have. I take his point—and will make it myself later in my speech—but there are concerns, and that is why I wish to raise them tonight.
I have, for example, heard from the Association of Charity Shops, which told me that the cost of music usage is of increasing concern to charities and voluntary and community groups throughout the UK. It quoted its sports club members who said:
"The average cost of a Performing Right Society Licence for a sports club is £369"— about £1 a day—
"However many sports clubs use music only incidentally, with audio-visual equipment being primarily available for training videos or to watch sports events."
One club treasurer could not understand why he had
"received numerous very aggressive phone calls and a letter from PRS threatening enforcement within 14 days" if he did not purchase a licence. It was felt that the intention of the legislation was to exempt not-for-profit clubs and that the PRS was exploiting some bad drafting. The club had removed all the offending equipment rather than pay for a licence.
Many charity shops use music to support an attractive retail environment, in the same way as any retail concern, except of course they divert all their profits to charitable purposes. According to the charity shops, the current Government consultation on music licensing threatens to add substantial costs to their outgoings. That money could only come from funds earmarked for vital causes. Surely that is not a desirable outcome.
My interest in this issue resulted from a conversation I had with the chairman of my local Federation of Small Businesses, Richard Thomas, who wanted to raise the concerns of his members because guest houses, other small businesses, and even a one-man band playing music in his own garage in Plymouth, had received telephone calls and demands for money. Some said that they had been frightened into paying by what they felt were bullying tactics, because they were told that if they did not have a licence they could face legal action for copyright infringement, and possibly become liable to pay damages and costs. Most felt that the hassle and potential cost of pursuing that would be prohibitive, so they paid up.
I have been inundated with correspondence and e-mails from individuals, businesses and organisations expressing similar concerns. One came from a gentleman named Mr. Robson, who is 75. He said:
"The business used to be bigger, but I've retired now really. It's more or less just a hobby."
He used to go to his office on his own once a week, if the weather was not good enough to allow him to go out into the garden. Unfortunately, Mr. Robson happened to be listening to Classic FM when he received a cold call from the PRS. He said that he gets a bit lonely in his office when he is by himself, so he puts the radio on. Sadly, he was unable to convince the PRS of his situation.
Mr. Robson said:
"The lady...didn't seem to want to listen to me. She said she could hear the radio on in the background".
Two weeks later, the same woman rang again. Afterwards, Mr. Robson received a follow-up-letter. He said:
"I don't know why they're picking on a poor old guy like me."
None of the other offices in the area in which he works received similar letters or contact.
Mr. Robson wrote back explaining the situation and thought he might receive an apology, but sadly all he got was a duplicate of the first letter. He said that
"two more have arrived since. I just bin them now."
Eventually, a PRS spokesperson confirmed that Mr. Robson did not need a licence. To its credit, the PRS called him to apologise.
We then had a problem with Plymouth hospital radio, which provides an excellent service. It has contacted me with wider concerns, because with a turnover of less than £20,000, fees of almost £450 to PPL and nearly £200 to PRS are already quite significant. However, its concern involves the possibility of an increase in costs following the outcome of the consultation process. It understands the need to pay for music, but is worried that the consultation could have an adverse effect on it. It also feels that there is an awful lot of confusion and uncertainty among its friends and people in the voluntary sector.
Plymouth hospital radio is staffed entirely by unpaid volunteers who collectively give up thousands of hours each year to deliver charitable aims. They stand out in cold weather collecting money, and the last time they did that they managed to collect £500. Those people have genuine concerns about how much will be levied and where they fit into the tariff system.
On the issue of whether the PRS and PPL should be treated differently, Plymouth hospital radio tells me that
"it is difficult to see a basis for this and we respectfully ask that when the legislation is redrafted"— if it is—
"it includes a provision for a total exemption for hospital radio station charities from having to pay fees to either of these organisations."
I hope that my right hon. Friend the Minister will listen to that concern.
I declare a second interest as a former president of Scunthorpe hospital radio, a broadcasting organisation. I support my hon. Friend's idea that hospital radio should be exempt, full stop. Does she have an opinion on whether a lot of the confusion over what the PRS and PPL do could be eased if they were amalgamated? There would be much more clarity about what people were licensed for and where the money was going.
My hon. Friend has a wide range of experience and talent. I did not know that he had been involved in hospital radio as well. Yes, there is a logic to what he suggests and the gist of what I am saying is that we need some clarity. There are too many grey areas, and I am sure that my right hon. Friend the Minister is listening to that point. Indeed, before my hon. Friend intervened, I was about to say that there are too many grey areas in the process, and a lack of transparency and clarity—exactly the point he made.
We also have an issue about the meaning of "public place". Although the legislation does not define what "in public" means, anything other than a basic domestic situation seems to be deemed "in public". Therefore, playing a radio in a workplace is deemed to be "in public" and requires a licence.
I have been given quite a lot of anecdotal evidence. For example, I chatted with a person at a dog kennels who played music to his dogs. He was the only person there, but occasionally the dog owners turned up, and when they did the playing of music was deemed to be "in public". Another example is the blacksmith who played music to himself while working in his forge. Because his forge was open to the public and people could walk past, he was technically playing that music in public.
The definition of "in public" therefore needs some basis in legislation. The Minister's response to me on
The process of establishing whether a person requires a licence involves writing up to three letters to a business, yet those letters cause deep unhappiness, too. Let me give some quotations from the Federation of Small Businesses. One person said:
"I was approached in a threatening manner that if we didn't pay up prosecution would soon follow. We paid up and continued to be targeted even though we already had a licence.
When we telephoned and complained, giving full details of our current licence, we were told that they couldn't find any record of our payment and we would have to pay again. After a bit of heavy handed perseverance I was able to resolve that we were licensed and that the records would be amended. This was done very grudgingly and without any form of apology for what was their mistake."
Another person said:
"We have been getting a run of letters for no reason, with each one of a more threatening tone—'Are you still breaking the law?', etc. I think they should be encouraged to educate, not threaten".
Another person said:
"I have had cause to get very cross with the performing rights licence people, they went through a period of months where they were on the telephone almost every day, threatening to send...inspectors to see if we were playing music in our café without a licence. We told them time and time again that although we were a café we did not play music—it took getting really nasty with them before they finally left us alone".
In all fairness, the PRS was concerned when I described some of the cases in which people felt that the letters and phone calls that they had received were too aggressive and said that it had already acted to soften the language in some of its letters. That is good news. The PRS has also undertaken an independent review of its calls and call centres, to ensure that calls are being handled courteously and accurately. In addition, the Federation of Small Businesses has been invited to visit the call centre to see the process for itself.
I have also heard anecdotal evidence of inspectors knocking on doors asking for money. The PRS has confirmed to me that that is not a practice that it engages in. For anyone listening to this debate or reading it, I would like to highlight my concern that there could be a scam going on. If anyone has somebody turn up on their doorstep claiming to be a PRS inspector, but not having made an appointment, that person is probably not a PRS inspector and they should either inform the police or contact the PRS directly for clarification.
There are wider concerns about how the PRS inspects and what its role is. It is not a Government agency, so what are its powers to gain entry to properties? I am advised that the PRS is able to enter already licensed premises, but would usually do so only with an appointment.
As I have said, the fee structure is complicated and most people have no idea how it works. There is a range of more than 40 licence tariffs and fees, which are calculated based on the size of the business and other factors, including how many people listen to the radio. However, when I selected a category on the website, it was almost impossible to work out what the cost would be. Again, the PRS assures me that it is already looking into the problem, particularly in some sectors where the existing charging system has been questioned, to see whether improvements can be made.
However, we need clarity in other areas, too. What happens, for example, if an employee in a company decides to bring in their radio to listen to? Is the employer liable? Do they need a licence? What happens if an employee plugs an MP3 player or an iPod into some speakers and everybody hears the music? Who has responsibility in those circumstances?
Guest house owners are also confused by the system. If music is being played in a room for the personal enjoyment of a guest, is it being played in public? Guest house owners in Plymouth have real worries about the licensing system. One is Steve Scaife, who has received threatening letters and says that the PRS had the bailiffs sent round, although there has been no court case. He says:
"This year I caved in and paid it, but nobody knows if guest houses should be paying it or not".
Clarification on that point would be useful.
The current consultation on music licensing offers an excellent opportunity to strike a healthy balance between the needs of the music copyright holders and the music users in the voluntary and community sector, but the feedback that I am getting suggests that the present options do not meet everyone's needs. I hope that my right hon. Friend the Minister will bear in mind the comments made in submissions to this consultation when drawing up the Government's position. He will also understand that, with the expanding use of music in a digital and online age, the PRS has a difficult task trying to ensure that those responsible for the writing and publishing of music are fairly rewarded for their efforts. Keeping track of music usage on the internet and in other media cannot be easy.
I know that my right hon. Friend will take note of the concerns that I have raised today—and of the willingness of the PRS, as expressed to me, to address the criticisms of its operation—and that he will do what he can to facilitate the process of improvement. Importantly, will he please ensure that Government do nothing to complicate the process further, thereby avoiding placing additional burdens and costs on small business and voluntary organisations?
I congratulate my hon. Friend Alison Seabeck on securing the debate and on the forensic, reasoned and able way in which she discussed the issues. I found that incredibly helpful. This is, indeed, an opportune moment for us to reflect on the activities of the copyright licensing bodies, and in particular of the Performing Right Society, given that a number of complaints have been received by the Intellectual Property Office and by my Department.
First, I hope that the whole House will join me in recognising the success of the members of the Performing Right Society. The society represents the songwriters, composers and publishers who make such a large contribution to the economic and cultural wealth of the UK. Of course, we are not just talking about the Beatles' back catalogue; we are talking about the creative work that young British people—many of them from the least advantaged parts of our society—are doing today. Two million people are employed in creative jobs, and the sectors contribute £60 billion a year to the UK economy. That is 7.3 per cent. of our gross domestic product. Over the past decade, our creative sector has grown at twice the rate of the economy as a whole, and it is well placed for continued growth as demand for content grows around the world.
Intellectual property remains the lifeblood of the UK's creative industries, and those industries are even more valuable to the UK economy in tough times than in easier ones. In the music industry, the value arises from copyright. Copyright is important because it provides the legal framework to sustain and protect creative value.
Let me now say a little more about the Performing Right Society—the PRS. It is a not-for-profit membership organisation representing 60,000 songwriters, composers and music publishers. PRS members have a right to request remuneration whenever their work is broadcast on radio or TV or in public. That right is protected under international, European Union and national legislation. My hon. Friend was right to say that the PRS is responsible for collecting the payments due to its members for the use of their music. In that sense, it is entitled to collect licence fees when music is broadcast in public, but of course, the value of music is not just about the revenue that it can bring. The value also lies in the music being heard and being accessible to the public.
What do we want our copyright system to deliver? We want it to maximise the availability of creative works to the public. We want to ensure that creative endeavour is rewarded, and that users can enjoy what has been created, on fair and reasonable terms. Here in the UK, we have one of the world's more liberal systems governing our licensing arrangements.
Let us look, for example, at the process of setting the tariff, which is the cost of the licence to the end user. Our system expects the PRS to negotiate tariffs and other terms and conditions with relevant representative bodies. Usually, that would be a trade association or similar body. Our system expects those players to agree a market rate for a licence, which is settled through negotiation. If negotiations break down, the user can refer the scheme to the copyright tribunal. In other jurisdictions, they do things differently. In some, the licence terms and conditions are set by the administration; in others, the licence terms are set by an independent tribunal; and some licensing bodies are under constant administrative supervision.
The questions we must ask ourselves are, first, whether our system is working and, secondly, whether it is seen as fair and reasonable. My hon. Friend is right to suggest that we also need to ask about the very nature of the word "public", particularly in the context where small businesses are facing harder economic times and the PRS has acknowledged that it is moving deeper into the types of businesses that it responds to. We are talking about very small cafés, very small neighbourhood hairdressers or the local chip shop, for example. My hon. Friend also raised issues about the hospital radio station and the local community centre. If the system is to work properly, it must gain the confidence of the public.
I welcome the Minister's balanced approach. I entirely agree that things need to be balanced, but economic downturns and recessions also hit performers, songwriters and composers, so while it is important to ensure that unfair burdens are not placed on businesses or the voluntary sector, it is also important to ensure that the people who actually work in the creative industries in the first place receive a fair remuneration for the work that they do. I am sure that the Minister will agree.
Speaking as a former cathedral chorister who still gets the odd royalty, I agree absolutely. There is real talent at the Dispatch Box, but the key question is balance and securing a system that commands the respect of the public. Clearly, some issues have gone awry over the recent period, so I have reflected on these issues and found scope for improvement in two areas.
First, we need to ensure that people understand the law, the PRS and what it is doing. Many small businesses are unaware that they need a licence and our inquiries suggest that not all large trade associations are fully aware of how the system works, as my hon. Friend the Member for Plymouth, Devonport showed. They do not always know that they can play a role in negotiating the terms and conditions of a licensing scheme, and some large associations are unaware that they can take a case to the copyright tribunal if they are unhappy with the terms and conditions.
We need to make sure that information is reaching the right people and organisations. We need them to know about the role of the PRS; we need to make sure that trade associations representing small businesses know about the system; and we need to ensure the rights of the PRS. Customers need to know what the PRS can and cannot do and they need to know their own rights as users and that avenues for redress are available for them in the copyright tribunal.
Secondly, we need to make sure that users have access to effective mechanisms for complaint and for judicial redress. As far as judicial redress is concerned, users, and particularly trade associations, need to know about the copyright tribunal, and they need to know that it has a function for them as a specialised court where they can seek adjudication on tariff schemes. The Select Committee suggested in March this year that the tribunal process had gained a reputation in some areas for being expensive and time consuming. I am pleased to announce that the Intellectual Property Office is implementing a series of reforms to change the position. However, we also need to ensure that we engage in the jurisdiction of that tribunal. Apart from the judicial process, I am anxious that individual users should have access to an effective complaints procedure.
I am grateful for what my hon. Friend has said. I have met representatives of the PRS, and agreed with them that there will be a code of practice to deal with complaints from individual users. The PRS will consult publicly on the code by the end of the year. That is a start, but I believe that more needs to be done. I am well aware that there must be an independent body to review complaints in a system of this kind. It cannot be right, in 2008, for there to be only an internal adjudication process within a single body, and I hope that I have been able to demonstrate to my hon. Friend that, in that respect, action is in hand.
As the new intellectual property Minister, I am encountering many new and interesting challenges, one of which is the need to ensure that intellectual property rights are properly understood and valued by those who live by and from the system. I have heard much in the debate, from my hon. Friend and others, that gives food for thought. I want it to be understood that I do not take these issues lightly, and will reflect seriously on the points that have been made. I consider it important—indeed, essential—to the protection of intellectual property for licensing schemes to command the respect of the entire community, and for no process to undermine the effort that our musicians make because it is seen to be harsh or unfair.
I have asked the PRS to reflect on the breadth, as it were, of those whom it approaches in seeking licences. Clearly it is not great if someone understands the process for the first time only because a significant amount is being sought from them. There are issues of public education, but beyond that there are issues of proper judicial process. I shall explore those issues further over the weeks and months ahead.
Question put and agreed to.
Adjourned accordingly at thirteen minutes past Nine o'clock.