The UK Copyright Tribunal has sided with songwriter collecting society PRS in a dispute over the royalties paid by cinemas for the use of music in films, ultimately agreeing that the royalty rate paid by cinemas should increase.
In a statement on the case, PRS says that it argued the previous rate, negotiated more than two decades ago, “no longer reflected the realities of today’s cinema industry”.
Both PRS and the UK Cinema Association “agreed that music plays an important role in the cinema experience” and the Tribunal accepted that “films, and therefore cinemas, are using more music now than they were in 2005 and so approved an increase in the royalty rate”.
Prior to the Tribunal hearing in June, Phil Clapp, CEO of the UK Cinema Association, told Screen Daily that taking its dispute with PRS to the Copyright Tribunal was “a very long, very expensive and very arduous process”, but that it had “no option” other that taking that approach because PRS’s proposal for revising its cinema licence “was so unreasonable, there wasn’t really a negotiation to be had”.
The cinema trade group is yet to comment on the Tribunal’s decision, though presumably it’s not too pleased. Meanwhile PRS, unsurprisingly, has welcomed the ruling, which COO Dan Gopal says “recognises the increased value of music in the overall cinema experience”.
The PRS team, he adds, “have worked tirelessly over many years to secure terms which better reflect the enhanced use of music in films and the significant contribution of our members’ work to the enjoyment of the film-going experience”. This judgement, he reckons “validates those efforts”.
When songs and compositions are used in films there are basically two licences required. First, the movie studio synchronises the music into the film, which involves copying the music. Because copyright law gives copyright owners control over the reproduction of their work, a licence is required for that copying.
In the UK, music publishers usually control the reproduction of any works they publish, and so the publisher will negotiate and agree a synchronisation licence with the film’s producer.
However, every time the finished film is screened, the music contained within it is performed in public. Copyright law separately allows a rightsholder to control the public performance of their work.
In the UK, the performance element of the song copyright - part of the ‘performing rights’ - is usually controlled by PRS not the music publisher, because songwriters assign their performing rights to their collecting society, often before they enter into any kind of publishing deal.
Which is why the cinema needs to secure a PRS licence covering the music contained in any films it screens. This system means that songwriters and publishers get a sync fee when the music is synchronised into the film, and then additional royalties each time the film is screened.
The PRS cinema licence also covers other uses of songs and compositions within cinemas, including music played between the films, or if the cinema hosts any events that involve DJs or live music.
Whenever the music industry employs collective licensing, so that a collecting society like PRS issues a blanket licence covering most works, it creates competition law concerns. In the UK, the Copyright Tribunal is an attempt to allay those concerns.
Where there is a dispute over what royalties PRS should charge under any one licence, companies or organisations representing licensees or other stakeholders can take the matter to the Tribunal, which is a specialist court. Judges then ultimately set the rate and other terms. In this case it was the UK Cinema Association that instigated that process.
As well as increasing the royalty rates, the PRS cinema licence is also being streamlined under this review. Previously cinemas could either pay a set rate per audience member or a percentage of ticket income. Moving forward it will always be a set rate per audience member.
The UK Cinema Association objected to that change, arguing that the fixed rate system doesn’t work for cinemas with lower ticket prices, which are often smaller independent cinemas. The trade group reckoned that where tickets are priced at more than £7.33 the fixed rate PRS fee works, but for those charging less than £7.33 fixed rates will result in higher payments overall.
Responding to that claim in June, PRS told Screen Daily, “We recognise the important cultural role small independent cinemas have in local communities. To support smaller cinemas, we are retaining the low admissions discount which can reduce a cinema’s royalty by up to 25%”. However, the UK Cinema Association argued that that discount scheme doesn’t necessarily address this particular issue.
PRS says that the new licence terms will now be implemented “once the updated tariff has been finalised, in consultation with the UK Cinema Association, and approved by the Tribunal at a further court hearing”. The increased royalty rates will then apply to relevant music use dating back to July 2024 and “will be increased at the start of each year in line with inflation”.
PRS concludes by saying it “will be working closely with the UK Cinema Association in the coming weeks to support their members in the transition to the new terms”.