PRS, the UK’s collective licensing organisation that represents songwriters and music publishers, has filed a potentially explosive lawsuit against Live Nation in the UK High Court and says that the live giant has shown “disregard” for the requirements of the live music licence that covers festivals and concerts.
In an exclusive statement to CMU, PRS said that “the vast majority of promoters and venues” comply with the requirements of the live music licensing tariff, “ensuring that music creators receive rightful payment for their works”. Live Nation has shown “disregard for these requirements”, continues PRS, which, for “a company which is dominant in the live music market is unacceptable”.
The lawsuit, filed in the Intellectual Property division of the UK’s High Court by PRS and PPL PRS Limited, the joint venture with PPL which administers live music performance licensing, points the finger at Live Nation (Music) UK Limited, as well as its festivals division Festival Republic, concert promotions subsidiary DF Concerts, and two Live Nation-owned festivals, the Isle Of Wight Festival and Manchester’s Parklife.
Specifically, PRS is taking issue with the way that Live Nation accounts the value of VIP tickets and packages when calculating how much should be paid to PRS. PRS told CMU that it is “committed to ensuring correct remuneration for music creators” and through the legal action it is “addressing Live Nation’s failure to correctly report the full price consumers have paid for VIP tickets and other ticket packages”.
Under the UK’s Copyright, Designs And Patents Act, permission is needed from the relevant rightsholders when their music is performed or played in public. This means that when live music is performed at a concert or festival, or recorded music is played as part of a DJ set, for example, the promoter or venue needs to obtain a licence for that performance.
In the UK, that is usually done through the Popular Music Concert Licence, which is administered through the PRS and PPL joint venture. Revenue from those licences flows via the collecting societies to the rightsholders of the music played.
For ticketed events, including concerts and festivals, the cost of the licence is calculated as a percentage of the amount of money brought in by ticket sales - or the “gross receipts” in the terminology of the licence.
That calculation is based on all of the money paid by consumers for tickets, regardless of who actually collects that money. Importantly, the tariff explicitly states that all booking fees, service charges and administration fees relating to the sale of tickets must be included in the calculation of gross receipts.
The only exclusions are for things like posting tickets out - where the postage is separately itemised to ticket buyers - and any VAT charges. So, for example, if a ticket is sold for £99 with a £3.50 booking fee and a £4 postage fee - a total of £106.50 for the ticket buyer - the “gross receipts” for that ticket would be £85.46 - the cost of the ticket and booking fee, excluding VAT, with the postage deducted.
At a simple level the way the licence cost is calculated is to look at what parts of the total cost relate directly to the music - in this case, the booking fee and ticket itself - and remove anything that is an external cost, which in this case would be the postage.
VIP tickets and VIP packages offered by concert and festival promoters are specifically addressed within the details of the tariff documentation, which says that ‘gross receipts’ includes “the total price of any single event admissions to boxes and suites, where hospitality such as food and/or drink and/or other private and exclusive facilities are provided within the ticket price”.
The ‘gross receipts’ for these types of tickets is calculated in one of two ways. When a VIP package provides access to, for example, a box or suite for multiple shows over a period of time, a per-ticket value is calculated based on the total cost of that package. Alternatively, gross receipts are calculated by using the price of the most expensive standard tickets in that section of the venue to set the baseline for VIP tickets.
So, for example, if you have front row seats at £200 but a VIP Section in the same part of the venue, with additional perks with tickets priced at £400, then at least £200 of that VIP ticket would be assessed for the ‘gross receipts’ calculation. Live Nation and PRS appear to disagree on how these calculations should be applied, and particularly when it comes to additional VIP perks and experiences.
The dispute comes at a time when Live Nation is actively expanding its premium and VIP offerings. In the company's Q3 earnings call earlier this month, CEO Michael Rapino emphasised the role VIP and premium plays in the company’s forward strategy, stating “we've been selling to the superfan for quite a while... We think it can grow up to 20% and more. We think premium experiences is a big underpin to our entire growth forecast”.
Earlier this year, at a Goldman Sachs conference, Rapino said that ‘premium experience’ - or VIP - was the company’s “most obvious, biggest opportunity”, adding “the business in general is becoming an area where premium pricing is something we can really look at”, going on to say that the company was looking at how, in some venues, it could increase from an “average of about 9% premium” to as much as 30% premium, and referencing “a current programme” to “roll out more VIP, more premium” in coming years.
When it comes to wider VIP perks, the way the revenue is allocated for inclusion in the ‘gross receipts’ calculation is a little bit more complicated, and all hinges on things that have a “nexus with the public performance of the music”.
If a VIP ticket includes perks like a pre-event performance, access to the soundcheck or “upgraded or enhanced seating or standing in a controlled area” or “VIP viewing platform”, then these things are considered to have a nexus with the public performance of PRS repertoire, meaning that a ticket selling at a premium that includes these sorts of perks would be wholly accounted as the cost of that ticket for the gross receipts calculation.
So, again, for example, if the standard ticket is £99 but the VIP ticket which includes access to the soundcheck and VIP seating costs £240 then, at a basic level, PRS would expect £200 of that (the ticket price excluding VAT) to be accounted as the ‘gross receipts’ for each VIP ticket sold. Additionally, if an artist does a Q&A at which music is performed - a post show Q&A with an acoustic performance of a key song, for example - then that would also be considered as having a “nexus” with the music, and so would be considered for VIP accounting.
“Features that do not have a nexus with the public performance” of music - which might have a separate cost for the ticket seller to fulfil - are excluded from gross receipts. This includes items such as travel, parking, dining, food and beverages, merchandise, event laminates, ticket pre-sales - and artist Q&A or meet and greet where there is no music performance.
This is where things begin to get complex. If you sell a VIP package that includes VIP pre-sale access, a pre-show soundcheck, VIP suite with complimentary food and drink, a limited edition VIP programme, free parking and an artist Q&A with photos after the performance, how do you begin to break down what should be included in the gross receipts, and what should not?
Equally, when VIP packages for festivals are being sold that include early entry, VIP camping, VIP viewing platform, backstage bar access with viewing screens, luxury showers and a golfcart shuttle service to VIP car park, how should those individual elements be priced to work out the ‘gross receipts’.
It’s complex. And, it seems, this is where PRS and Live Nation disagree.
“Live music venues and promoters are required to pay a royalty to songwriters for the music performed at concerts and festivals, based on a percentage of the price paid by the consumer, and to adhere to the reporting standards set out in PRS’s applicable tariff”, continues the rights organisation’s statement. “This includes full and accurate reporting of all ticket types, including VIP tickets and other ticket bundles and packages”.
“The vast majority of promoters and venues comply with the tariff”, the statement goes on, “ensuring that music creators receive rightful payment for their works. Disregard for these requirements by a company which is dominant in the live music market is unacceptable”.
The dispute comes at a fairly important time for the live music industry. As promoters increasingly look to premium and VIP experiences as a key driver of revenue growth, the outcome of this case could have significant implications not just for Live Nation, but for how the entire sector approaches VIP pricing and licensing.
With Live Nation publicly stating its intention to dramatically increase its premium ticket offerings from current levels to as much as 30% of inventory, and PRS insisting on “full and accurate reporting of all ticket types”, including VIP packages, the stakes for both sides are considerable. The case could set an important precedent for how premium tickets are valued for performance licensing across the live music sector.
PRS statement in full:
Live music venues and promoters are required to pay a royalty to songwriters for the music performed at concerts and festivals, based on a percentage of the price paid by the consumer, and to adhere to the reporting standards set out in PRS’s applicable tariff. This includes full and accurate reporting of all ticket types, including VIP tickets and other ticket bundles and packages.
The vast majority of promoters and venues comply with the tariff, ensuring that music creators receive rightful payment for their works. Disregard for these requirements by a company which is dominant in the live music market is unacceptable.
PRS for Music stands firm in its mission to protect its members and create a level playing field for all event promoters and venues that honour their licensing obligations. On behalf of our members, we now must take the necessary actions to rectify this situation.
We urge all stakeholders in the live music sector to commit to transparency on ticket prices and sales, and to uphold standards that ensure both creators and the industry can thrive together.
CMU has reached out to Live Nation for a comment, but at the time of publication the company had not responded.
