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Workplaces need a music licence – but enforcement is unfair, says FSB

A British trade body has called for new rules to exempt small businesses from music licensing fees that are payable if they let staff listen to a radio or watch TV. Some employers have received demands for unpaid licence fees dating back several years.24 Jun 2008

The Federation of Small Businesses (FSB) has criticised actions of the Performing Right Society (PRS) which represents music creators and publishers. PRS licenses the public performance of music in all workplaces.

"The PRS collects money on behalf of artists and musicians and we've noticed in the past few weeks that they've become extremely aggressive with small businesses, demanding back-dated licenses which can cost thousands of pounds," FSB spokesman Simon Briault told OUT-LAW.COM. "We think there should be an exemption for small businesses."

A public performance licence from PRS is required for any 'mechanical performance' of copyright music as a background to work, meals, rest rooms or breaks at work places in the UK. The term covers recorded music played on CD as well as music playing on a radio or television set. So providing a TV in a staff canteen requires an employer to buy an annual PRS music licence, not just a TV licence. If employees are listening to music through headphones a music licence would not be required because it does not constitute a public performance.

For many businesses, the typical fee is a few hundred pounds a year. A licence for music played in a canteen or rest room costs 14.99 pence per day, per unit of 25 employees. So an annual licence for 250 days for a canteen available to 135 employees would cost £224.85, according to PRS.

Briault said that while it was fair for a business playing music that could be heard by the public to pay licence fees, small businesses that play a radio that only a few staff can hear should be exempt.

"Our complaint with the PRS is that they are not accepting the arguments of small business owners," he said. "Technically they [PRS] are within the law. We think they're taking it way too far, though, and their interpretation of it is far too stringent."

"PRS have taken it out of all proportion," he said. "Small business owners who happen to have a radio in their back room are being told 'you owe us'."

"The vast majority of people have never heard of the PRS," he said. "It seems in the past month or so they've gone completely unreasonable. Someone who used to work at PRS told me they were having to chase one business for over six years' unpaid licence fees – in total over £21,000."

PRS said that that example is untrue. It told OUT-LAW that it has never made any such claim.

Another FSB member complained about receiving eight calls in 10 days about unpaid licences.

Briault said the FSB's main objection was in the tactics of the PRS. "If it was conciliatory, you know, 'this is a warning – you need to have a licence; get rid of your radio if that's what you choose' – that would be fair."

The FSB is also calling for an exemption for micro businesses, defined by the Government as any business employing up to 10 people.

"Anyone with less than 10 staff should be exempt. That would require an amendment to the 1988 law [the Copyright, Designs and Patents Act]. But also a change of attitude from the PRS," said Briault.

"Instead of harassing small business owners and trying to get money out of them whatever the cost, they should be more conciliatory. Use their generous percentage of the money that they do take to inform business owners about what the law is and, if appropriate, they can stop listening to the radio," he said.

A spokesperson for the PRS told OUT-LAW.COM: "Under the statute of limitations we are able to legally back charge up to six years. Our charges are based purely on our customers' declarations and agreement."

She said that 350,000 businesses across the UK currently have PRS licences and last year it contacted over 100,000 businesses.
 
"All businesses first receive an introductory letter and informative brochure before being contacted by phone to establish if they need a PRS Music Licence," she said. "We also run advertising campaigns in print and on radio throughout the UK to help businesses understand the requirement for a PRS Music Licence if they are playing music in their business. We only wish to charge for the correct level of music usage and we will always aim to determine this with the customer."

The PRS said has invited the FSB to discuss its views and ideas for a micro business exemption directly with the PRS.

"We aim to ensure that our charges and processes are fair and reasonable," said the spokesperson for PRS. "Unfortunately, the FSB has not contacted PRS to discuss these complaints or any of its suggestions. PRS has invited the FSB to discuss its views and ideas directly with PRS."
 
She said that many of the PRS's 60,000 members "are themselves small businesses and many rely on income from royalties." She added that small businesses pay less, as little as £69 per year or less than £1.35 per week.

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