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A new initiative from PRS for Music, and collecting society partners GEMA (Germany) and STIM (Sweden), is set to change the face of online licensing and digital royalty payments across Europe.
This year, the organisations are launching a pan-European hub to offer Digital Service Providers (DSPs) a single port of call for online licences covering the repertoire they administer, plus works from other repertoires they represent.
It’s been dubbed by industry insiders, commentators and the societies’ Chief Executives as the ‘biggest copyright project in history’ and the ‘most significant music business development of the past decade’.
Why is it so important? Because, since 2005, a European Commission recommendation has enabled rightsholders to grant permission for multinational online licensing and conventional national licensing to different societies. This has led to a disintegration of traditional copyright assignment practices – making it difficult for DSPs to clear rights and almost impossible for collecting societies to efficiently process royalties.
As Robert Ashcroft, Chief Executive of PRS for Music, told M: ‘Unfortunately the collecting societies’ back offices, which were used to working on a national basis, were incapable of handling accurately that kind of processing.
‘So there were a number of years when the money got held up, where it was not possible to pay accurately and where there were significant over-claims – that is, multiple rightsholders or collecting societies claiming shares in the same works – which proved very difficult.’
The new hub, which is on course to begin paying out royalties for the first quarter of 2015 by the end of the year, is set to revolutionise current practices. It is built to handle granular, transactional processing involving hundreds of billions of online music usages, and pay out accurate royalties accordingly.
This year, the organisations are launching a pan-European hub to offer Digital Service Providers (DSPs) a single port of call for online licences covering the repertoire they administer, plus works from other repertoires they represent.
It’s been dubbed by industry insiders, commentators and the societies’ Chief Executives as the ‘biggest copyright project in history’ and the ‘most significant music business development of the past decade’.
Why is it so important? Because, since 2005, a European Commission recommendation has enabled rightsholders to grant permission for multinational online licensing and conventional national licensing to different societies. This has led to a disintegration of traditional copyright assignment practices – making it difficult for DSPs to clear rights and almost impossible for collecting societies to efficiently process royalties.
As Robert Ashcroft, Chief Executive of PRS for Music, told M: ‘Unfortunately the collecting societies’ back offices, which were used to working on a national basis, were incapable of handling accurately that kind of processing.
‘So there were a number of years when the money got held up, where it was not possible to pay accurately and where there were significant over-claims – that is, multiple rightsholders or collecting societies claiming shares in the same works – which proved very difficult.’
The new hub, which is on course to begin paying out royalties for the first quarter of 2015 by the end of the year, is set to revolutionise current practices. It is built to handle granular, transactional processing involving hundreds of billions of online music usages, and pay out accurate royalties accordingly.
The ambitious project has been five years in the pipeline, with European competition clearance only granted this summer. It has been estimated that 70 to 80 percent of European online processing would pass through the hub.
Ashcroft believes it could be the start of something bigger for Europe, and possibly the rest of the world. As a long-time advocator of the ambitious Global Repertoire Database (GRD) - a concept which failed to get off the ground - he is acutely aware of the possibilities and pitfalls. ‘By 2017 we will have more societies’ data in our hub than was envisaged for the first stage of the original GRD,’ he explained.
‘So, in the end, the GRD will come into being organically over the years, as an additional benefit of the hub. I believe we need a consolidated database in Europe. I’m also seeing a growing need in Asia and America. I’m quite confident it will evolve that way.’ In fact, this initiative could lead to a number of large copyright hubs across the world, built to handle online processing in the increasingly complex digital music space.
Dr Harald Heker, Ashcroft’s counterpart at GEMA, agreed: ‘We have seen a number of initiatives failing in this area and are therefore proud of being able to demonstrate our will and ability to deliver such consolidation.
‘We expect, and explicitly welcome, the development of further hubs offering fully integrated services for both licensing and processing as we feel that competition will increase motivation to offer even better services at lower cost.’
However, Ashcroft has warned that although the hub represents a massive leap in the right direction, more work is needed to improve royalty processing accuracy.
The quality of industry ‘metadata’, including the rightsholder information embedded into each digital track, must improve, he said. PRS for Music has been working with record companies (which create the music files) and the DSPs (which offer them to consumers) to expand the breadth, depth and accuracy of the data. But it’s not just about improving the accuracy of the data held within the tracks. The way sound recordings are identified and then matched against musical works must be improved too.
‘When all of this metadata becomes more reliable we’ll be able to get accurate insight and be sure we know exactly who owns what, how much it’s been played and to whom we owe royalties,’ said Ashcroft.
‘It’s only when the tide goes out that you see the rocks on the beach. We’re now in a position where we can begin to identify and work on these things. There’s always the next step forward. The hub is an important one but it’s not the end.’
More societies are predicted to join the hub over the coming months, as faster payments and lower costs make ripples across the sector. This is certainly something Heker is keen to encourage. ‘We are open and willing – within the framework of what is possible – for further societies to become customers of the hub,’ he said.
‘There are some candidates in line, such as the Belgian society SABAM. There are also some societies which come to mind because of regional, linguistic, cultural or political proximity with the existing partners. However, there is no “wish list”.’
For more information visit prsformusic.com/aboutus/press
Ashcroft believes it could be the start of something bigger for Europe, and possibly the rest of the world. As a long-time advocator of the ambitious Global Repertoire Database (GRD) - a concept which failed to get off the ground - he is acutely aware of the possibilities and pitfalls. ‘By 2017 we will have more societies’ data in our hub than was envisaged for the first stage of the original GRD,’ he explained.
‘So, in the end, the GRD will come into being organically over the years, as an additional benefit of the hub. I believe we need a consolidated database in Europe. I’m also seeing a growing need in Asia and America. I’m quite confident it will evolve that way.’ In fact, this initiative could lead to a number of large copyright hubs across the world, built to handle online processing in the increasingly complex digital music space.
Dr Harald Heker, Ashcroft’s counterpart at GEMA, agreed: ‘We have seen a number of initiatives failing in this area and are therefore proud of being able to demonstrate our will and ability to deliver such consolidation.
‘We expect, and explicitly welcome, the development of further hubs offering fully integrated services for both licensing and processing as we feel that competition will increase motivation to offer even better services at lower cost.’
However, Ashcroft has warned that although the hub represents a massive leap in the right direction, more work is needed to improve royalty processing accuracy.
The quality of industry ‘metadata’, including the rightsholder information embedded into each digital track, must improve, he said. PRS for Music has been working with record companies (which create the music files) and the DSPs (which offer them to consumers) to expand the breadth, depth and accuracy of the data. But it’s not just about improving the accuracy of the data held within the tracks. The way sound recordings are identified and then matched against musical works must be improved too.
‘When all of this metadata becomes more reliable we’ll be able to get accurate insight and be sure we know exactly who owns what, how much it’s been played and to whom we owe royalties,’ said Ashcroft.
‘It’s only when the tide goes out that you see the rocks on the beach. We’re now in a position where we can begin to identify and work on these things. There’s always the next step forward. The hub is an important one but it’s not the end.’
More societies are predicted to join the hub over the coming months, as faster payments and lower costs make ripples across the sector. This is certainly something Heker is keen to encourage. ‘We are open and willing – within the framework of what is possible – for further societies to become customers of the hub,’ he said.
‘There are some candidates in line, such as the Belgian society SABAM. There are also some societies which come to mind because of regional, linguistic, cultural or political proximity with the existing partners. However, there is no “wish list”.’
For more information visit prsformusic.com/aboutus/press
