The UK's main music licensing agency has changed the way that it will charge companies to stream music online. The Performing Rights Society's PRS for Music has increased the proportion of revenue it takes but reduced the per-song cost.
PRS for Music charges companies for using music and passes a portion of that money to the writers of music. Companies like Spotify and Google, which owns YouTube, must pay it for the right to stream music online.
PRS for Music is reducing the amount that it charges a company to stream a song from 0.22p to 0.085p. But it will increase the share it takes of any revenue earned from the service. That will increase from 8% to 10.5%, it said. The changes will take effect from 1st July.
The reduction in per-song fees will be welcomed by online broadcasters. Advertising and other incomes are typically low for the services, meaning that the increase in proportion of earnings taken is likely to be less of a worry for providers.
"We believe these new streaming rates will stimulate growth in the digital music market and will benefit our licensees and our members," said Andrew Shaw, managing director of broadcast and online at PRS for Music. "This is a good deal for music creators and for music lovers."
Companies have struggled to make money from streaming music online. Online radio stations such as Last.fm and Pandora have tried to create systems which predict listeners' preferences based on past listening and recommend new music, but they have run into financial trouble in the face of per-listen charges.
Pandora had to restrict all international listening in a dispute with the US Copyright Tribunal over per-track fees. It pulled out of the UK last year. YouTube has also blocked UK access to music videos, citing high fees. YouTube said it was still in negotiation with PRS over licensing terms.
Online radio stations in the US have argued that they are expected to pay per-track fees which are higher than satellite radio fees, while traditional radio does not pay those fees at all. Shaw, though, backed the Tribunal's view that per-track fees were the right way to regulate the business.
"The Copyright Tribunal established the principle of a per stream minimum to protect creators; maintaining this principle will ensure that writers, composers and music publishers continue to be rewarded every time their music is enjoyed," he said. "As new entrants join the market and existing providers expand, music creators will reap the rewards by sharing in the success that their talent is generating."
PRS for Music said that its board approved the new rates last week after a consultation process lasting seven months.
Martin Stiksel, co-founder of Last.fm, told the Financial Times newspaper that the reduction in per-song rates was welcome, and could be evidence that revenue-share deals alone will be the way that future deals are structured.
“It goes to show that regardless of the economic situation, they have been listening to the feedback from the industry and it shows that [PRS] are taking a lead in Europe," he told the paper.