Dear PRS
We feel we must respond to the press release that PRS circulated after we were forced to issue proceedings against the organisation. We are writing this so that PRS Members can have some much needed transparency on what the organisation is claiming to do in their name, and is spending their money on. We also feel that its important that PRS staff have transparency on this as well.
- We note that PRS in its statement, fails to acknowledge that their own Writer Members are suing the organisation. 90% of the Claimants are PRS Writer Members, and PRS's public remarks ignore them altogether. PRS has made no attempt to work with those PRS Writer Members or to address their serious concerns. We urge PRS to engage with the reality of this situation, in that it's PRS's own Members that consider that the organisation no longer appears to be operating in the best interests of its Members.
- PRS claims in its statement that:
"We have been engaged with PACE on these issues for more than five years including with representatives of the PRS Members Council and have sought to address their concerns collaboratively.... PRS for Music has consistently sought constructive dialogue with PACE for many years, proposing and implementing solutions to the issues raised... Given PRS for Music's sincere efforts to engage constructively'
That is a false narrative. What PRS are claiming is simply untrue.
- PRS have refused to engage or discuss any matter with PACE for more than 7 years now, let alone having done so in a sincere or constructive way.
- PRS have refused to address any concerns, and certainly not done so collaboratively.
- PRS have refused to have a dialogue with PACE, constructively or otherwise.
- PRS have refused to propose any solutions, and in the Claimants' view, have failed to implement any solutions to the issues.
In our view PRS has displayed an arrogance in dealing with these matters. PRS seems to believe that they don't need to discuss or constructively engage with the concerns of its Members, and can simply impose obligations without consulting the Membership, or receiving the Membership's approval.
To provide transparency, PACE has met with PRS twice on these matters:
a) On 4th October 2022 Adam Elfin and Paul Crockford from PACE met with Jonathan Aitken (General Counsel) and Claire Jarvis (then Director of Membership) at PRS' office. Mr. Aitken opened the meeting by stating that they were only meeting with PACE to inform them of the changes to the withdrawal process, and there was to be no discussion. During the meeting Jonathan Aitken and Claire Jarvis refused to discuss any of the material points. However, they did confirm that during the internal discussions at PRS regarding the withdrawal process, PRS had not consulted with the Membership about them, had not consulted with anyone that had withdrawn Live Public Performance Rights, and had not consulted with anyone that had Direct Licensed Live Public Performance Rights.
PRS's proposal was that PACE endorsed PRS's process and all elements of it.
b) On 07th February 2023 Adam Elfin and Paul Crockford from PACE along with two managers met with Andrea Czapary Martin (CEO), Julian Nott (Chair) and Sami Valkonen (Chief International Business Officer) at PRS' office. Julian Nott stated that the purpose of the meeting was, "to listen to what you have to say'.
When it was mentioned to Andrea Czapary Martin at the beginning of the meeting that some of the participants had problems at reception gaining access to PRS's office, Ms. Martin responded, "Yes, we have to protect ourselves." Surprised at the response, she was asked who PRS needed to protect itself from. Her reply was "Members." She was then asked why PRS needed to protect itself from Members. She explained that it's "Because they can get very angry." When asked why Members can get very angry, her shocking response was "Because they think it's their money."
During the meeting Ms. Martin simply read talking points provided to her. Andrea Czapary Martin, Julian Nott and Sami Valkonen refused to discuss any of the material points. It was very evident from the meeting that neither Ms. Martin nor Mr. Nott had an appropriate or sufficient grasp of the relevant matters in dispute or of PRS's own processes, and they both just deferred to Mr. Valkonen on all points. For example, Mr. Nott repeatedly refused, or was unable to answer whether it was in the best interests of PRS Members to have transparency on the administration fees and deductions from overseas PRO's that PRS Members are suffering when they license their rights internationally through PRS. Mr. Nott deferred to Mr. Valkonen on the matter, and Mr. Valkonen stated that he didn't know whether it was in the best interests of Members to have transparency on the administration fees and deductions Members are suffering, and that it would need to be studied.
We urge Julian Nott as Chair and as a writer to publicly confirm that it is indeed in the best interests of PRS Members to have transparency on the administration fees and deductions from overseas PRO's that Members are suffering when they license their rights internationally through PRS.
We also urge Mr. Nott to confirm that PRS will place this information on PRS's website, so that it's accessible to all PRS Members, and Members can then finally gain long overdue transparency on the deductions they are suffering when they license their rights through PRS internationally. Presumably PRS has this information, and can easily publish it on the website within the month (not just for live, but also for radio, TV, general, online, etc, for all usages).
3. We find it interesting that PRS acknowledge that:
"PRS for Music is owned and controlled by its members and exists to protect the collective interests of all the songwriters, composers and publisher members we represent fairly."
It is precisely because PRS is failing, "to protect the collective interests of all the songwriters, composers and publisher members that the Claimants have brought proceedings against PRS and take issue with the Major Live Concerts Service, the Ad Hoc Preferential Fees, and the Pop and Classical Concert Cap. The Claimants are of the firm view that these policies work directly against the collective interests of the PRS Membership. Where PRS chooses to award preferential conditions to a tiny proportion of rightsholders, it seems inescapable that the vast majority of PRS Members will receive disadvantageous conditions. and are being charged proportionally higher - and in many cases actually higher - administration fees by PRS.
PRS acknowledging that the organisation should "represent" its Members "fairly" is in stark contrast to:
(i) How the PRS Writer Claimants feel that the organisation is treating them, and other Members.
We feel that the policies the organisation is seeking to impose on Members are wholly unfair and unreasonable, and:
(ii) The statements made by PRS in court proceedings with Delicious Digital (Claim No. IL-2020-000106), where it argued (using Members' money) that, "The Membership Agreement...
do[es] not...contain any express term requiring the [PRS] to act reasonably or fairly or in a transparent manner towards [Members]."
4. PRS claims that:
"Our policies and rules follow a thorough and extensive approval and review process by the Board and the Members' Council'
PRS has decided to spend Members' money to defend those policies, and we challenge PRS to support the claim above, and provide the Membership transparency on:
(i) The process;
ii) The information and opinions provided to those making the decisions, and; (iii) The minutes of all meetings that included the policies in dispute,
PRS has to date chosen not to share with its Members details of the decision making process about policies that are imposed on the Membership. The Claimants believe that PRS has not been transparent with the Membership about the dates, agendas, attendances, minutes, information provided, and decisions of Members Council, Board, committees and group meetings of PRS. In effect, it appears that the Membership have no transparency on the governance of their own organisation. PRS doesn't even provide contact details for Members Council members to the Membership.
We feel that the Membership deserve full transparency on the operation and governance of their organisation.
5. PRS claims that:
"The rules which govern the process for live rights withdrawals were approved by members at the PRS Annual General Meeting."
However, to the best of our knowledge the Membership have not approved the following at a PRS AGM, or anywhere else:
- The Indemnity Requirement;
- The Fee Requirement, or its amount, or;
- The Additional Agreement Requirement, or the form of the agreement.
With regards to the Notice Requirement, PRS has refused to undertake a consultation process with the Membership about it. PRS decided to include the requirement within one extensive resolution (Resolution 10) that also included changes to Rules 1, 2, 3, 4, 5, 6, 6A, 6B, 7-11, 11A, 11B, and 12 at the 2020 AGM. PRS only gave the Membership 3.5 weeks notice of the AGM and the proposed changes, for an AGM that was held virtually during a Covid lock-down.
In our view, no reasonable person could conclude that PRS has appropriately engaged with, or received the Membership's approval for any of the requirements PRS is seeking to impose on Members when they withdraw their live rights.
6. PRS claims that:
"We have worked extremely hard to simplify our processes in the interest of our members" Whether or not PRS consider that they have "worked extremely hard" on this matter, the Complainants position is that the results of that work are neither a simplified process, or a process that's in the best interests of the Members, or a process that is lawful. Even if the process was simple, which we don't consider it is, none of the tests within the law are whether the process is simple. In any event, we have explained a number of ways in which the process could be simplified to the benefit of Members. To date, PRS has chosen not to engage with the changes which we have proposed.
7. PRS states that:
"our processes... which PACE has consistently failed to comply or engage with."
We are very familiar with PRS trying to demonise PACE. However, PACE is not a Rightsholder, or a Member of PRS, or withdrawing rights from PRS. Consequently, PACE has no process to comply or engage with. It would be constructive if PRS acknowledged and internalised that it is PRS's own Writer Members that have withdrawn their rights from PRS, and do not consider PRS's process appropriate, in the best interests of Members or lawful, and have had to resort to suing the organisation as they have determined that legal action is now the only possible recourse to resolving these disputes.
8. PRS complains that:
"This has resulted in royalties being unnecessarily withheld from PRS members for the live performance of their works at concerts"
PRS is, and always has been, able to collect royalties arising from the exploitation of rights that have not been withdrawn by Rightsholders. Rather than trying to blame third parties for its own failures to distribute royalties to PRS Members, PRS may want to consider that any difficulties it's having are of its own making.
The Writer Claimants - who are also PRS Members - have informed PRS that they have withdrawn their rights, and consequently instructed PRS not to collect their royalties. It is actually PRS's actions in trying to obstruct their Members from Direct Licensing, that, "has resulted in royalties being unnecessarily withheld from PRS members for the live performance of their works at concerts".
Those PRS members being the Writer Claimants.
9. PRS also complains:
"This has resulted in... complexity and uncertainty for live music venues and promoters."
In our view, any issues which venues and promoters are having are due to:
- PPL PRS Ltd, on behalf of PRS, asserting things to venues and promoters that are simply untrue in an attempt to obtain money from those venues and promoters, and;
- PRS trying to obstruct its Members from Direct Licensing and working against the stated documented best interests of the relevant Members.
10. PRS suggests that:
"MLCS is just one part of a wide range of services which PRS provides to members at different stages of their career."
We note that PRS is unable to state that the MLCS (Major Live Concert Service) does not award preferential conditions to a tiny proportion of arbitrarily chosen rightsholders, resulting in the vast majority of PRS Members receiving disadvantageous conditions and being charged administration fees by PRS which are proportionality higher and in many cases actually higher. In our view, it would be better for PRS to treat all its Members equally, rather than presenting what they claim is "a wide range of services...to members at different stages of their career".
We note PRS's 29th May 2019 press release, where Sami Valkonen (Chief International Business Officer at PRS) stated that PRS are, "working with the society network to implement these critical changes that are necessary to not only to keep MLCS competitive in the new marketplace, but, frankly, to keep the entire society network relevant in this area." The implication being that without the MLCS - and therefore rightsholders who are generating less income from the live performances of their works subsidising the minority of rightholders who earn the most - PRS and the entire society network are too inefficient to remain competitive and relevant in this area.
11. PRS claims that:
"Contrary to the claim that PRS is not acting in the best interests of its members and in particular
"smallest writers"; we are providing tailored cross-industry tools and services. This includes educational materials, songwriting camps, mentoring schemes, and touring and hardship grants (via the PRS Foundation and Members' Fund) for up-and-coming music creators."
In our view, PRS must focus on ensuring the organisation:
(0) Obtains all licenses fees generated by PRS Members with the fewest deductions in the quickest time, and;
(ii) Distributes those license fees with the fewest deductions in the quickest time and in the most transparent way, and to the correct Members.
It can then undertake a consultation with the Membership as to the value of providing "cross-industry tools and services. This includes educational materials, songwriting camps, mentoring schemes"
Suggesting that smaller writers should be satisfied with being charged proportionally higher fees - and in many cases actually higher fees - than more prominent writers, as PRS is providing
"educational materials, songwriting camps, mentoring schemes", suggests a lack of awareness and disconnect from the Membership and the Members' best interests.
As to the "touring and hardship grants (via the PRS Foundation and Members' Fund)", we wonder whether PRS has considered that those smaller writers might not have to go through the humbling process of making applications to funds to receive money that they may have otherwise received without having to apply for it, if PRS:
(i) Had obtained more of the Members license fees generated internationally; ii) Adjusted its black box distribution policies, and;
(iii) Had not charged those Members proportionally higher administration fees and in many cases actually higher administration fees on live and international income.
For example, if a rightsholder had their rights performed at a stadium for a concert that had sold 80,000 tickets at £150 per ticket:
80,000 x £150 = £12,000,000 - 20% (VAT) = £10,000,000 × 4.2% (PRS tariff rate) = £420,000 x
23% (PRS administration fee) = £96,600 PRS administration fee
Instead of obtaining £96,600 in admin fees which could be used to reduce the 23% charged to Members, PRS has decided to discount this amount to a mere £125 with the MLCS (which in the above example would result in an effective admin rate of 0.03%).
Even in PRS's own document they admit: "we are treating the PRS £125 deduction as being 0.2% based on an average MLCS Event generating £62,500 in royalties."
This is in stark contrast to the rest of the Membership (including those who may have applied to receive touring and hardship grants) who are being charged 23%, 115 times more than the effective average rate PRS is awarding to the most prominent rightsholders. A PRS Member whose rights were performed at a concert selling 518 tickets at £30 per ticket, with a gross of £15,540, will pay more in administration fees to PRS in actual terms (£125.10), than a rightsholder whose rights were performed at a concert selling 80,000 tickets at £150 per ticket, with a gross of £12million (£125.00).
Even if PRS were not to apply the MLCS, but were to apply the £1,250 Cap, the result is similar. In the stadium example above, PRS would still not obtain the £96,600 admin fees which could be used to reduce the 23% charged to all Members. Instead they would only obtain £1,250, an effective admin rate of 0.3%, with all other Members being charged 23%, 76.6 times more than the effective rate PRS would be awarding to the most prominent rightsholders.
On top of which, PRS has decided to include live black box income in MLCS distributions, further disadvantaging the smaller writers. It would seem logical that live black box income cannot have been generated from MLCS concerts. Rather than distributing all of this black box income to non-MLCS concerts (which would benefit the less prominent Members), PRS has instead decided to include large amounts of this money to MLCS distributions. In its own document PRS states:
"In 2019 the total PRS unclaimed pot that was used for analogies was £2.7M of which £1.45M was allocated to MLCS"
Such a distribution policy does not appear in any PRS document available to the Membership, or have received the approval of the Membership. We challenge PRS to be transparent with the PRS Membership about all effective admin rates, and all amounts of black box monies it is awarding to rightsholders for live performances.
12. PRS claims that:
"Last year, we announced a record low cost-to-income ratio of just 9.2%, ensuring more royalties (£943 million) were paid to more members."
- There are questions regarding how those figures have been calculated.
- PRS refuses to allow its Members to audit the organisation. We challenge PRS to be transparent with the Membership, and explain why it considers that Members should not be allowed to audit the organisation.
- PRS claim above is only one part of the story. We - and, we assume, the balance of PRS Members
- would like to have transparency on:
(i) How much money has been generated by PRS Members internationally; ii) The sums which have then been retained by PRS's affiliated PROs, and; iii) Any other shortfall which PRS has failed to obtain and distribute to its Members.
PRS's claim of a record distribution might also indicate a record shortfall in the amounts obtained and distributed by PRS. We challenge PRS to be transparent with the Membership about how much PRS Members have generated internationally, and of that how much PRS has failed to distribute to PRS Members.
d) In our view, it is not the total distribution that PRS Members care about, but whether what's been distributed has gone to the correct Members. Again, PRS must be transparent with the Membership about what the size of black box income is (i.e. license fees that PRS receives without complete census usage data for those fees), and how they have distributed it. Despite the bizarre claim by Julian Nott (Chair of PRS) to the PRS AGM on 04th June that, "there is no "black box" in that sense, or any other sense at PRS.", PRS undoubtedly has black box income, likely at least in the 8-figures per year. Again, we challenge PRS to be transparent with the Membership about the amount of black box it receives in total and per type of usage, and how it has distributed those amounts.
13. PRS asserts that:
"We will be vigorously defending the society against these claims."
What PRS is admitting with this statement is that PRS will spend substantial amounts of Member's money to try to resist the will of the Members, and resist changes that would benefit the Members.
- PRS is spending Members money on PRS staff's time dealing with this matter.
- PRS Members are paying for - according to The Law Society - 21 (twenty-one) in-house lawyers atPRS, bearing in mind that,
- PRS is also spending Members' money on out-of-house lawyers at Wiggin.
- PRS is also spending Members' money on an out-of-house leading counsel.
- PRS is also spending Members' money on an out-of-house competition counsel.
- PRS is additionally spending Members' money on an out-of-house economic expert.
We challenge PRS to be transparent with the Membership about how much of their money they have spent, and are intending on spending, to attempt to defend policies that make the Members less money and restrict their ability to exploit their rights in the way which they would like.
We also challenge PRS to justify to the Membership what benefits it perceives there are for the Membership, from PRS spending their money to resist the will of the Members, and from fighting reforms that would empower and benefit writers and publishers.
We look forward to receiving PRS's public responses to the points raised above.
Regards,
The Claimants
