Streaming royalties slashed - or are they?

 

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By Barry Collins

Posted on 26 May 2009 at 17:46

The Performing Rights Society (PRS) has slashed the cost of streaming music royalties for start-ups - but admits big sites could end up paying more to stream music.

Under the new agreement, on-demand streaming sites such as Spotify will see the fee per stream reduced from 0.22p to 0.085p. However, the headline royalty rate is being raised from 8% of revenue generated to 10.5%.

Firms will pay either the per-stream fee or the overall royalty rate, whichever is higher.

The PRS says the new fee structure is designed to reduce the burden on start-ups, but will ensure the PRS reaps a higher rate of revenue from larger, well-established sites.

"For a typical site that launches, they will pay the per-stream rate," explained a spokesman for the PRS. "As more money comes in, the share of revenue [fee] will kick in."

Commentators have claimed the reduced fees are designed to tempt back services such as YouTube and Pandora, which have both bowed out of the UK music market in a row over royalty fees. Yet sites such as YouTube - which stream millions of music videos every month - could end up paying more under the new scheme.

Google says it's yet to decide whether the new pricing structure will tempt it back. "We welcome any efforts to make licensing costs more realistic, but as we're still in discussions with the PRS to agree license terms for YouTube we're unable to comment further," a spokesman told PC Pro.

The new tariffs will last for three years and will be effective from 1 July.