Lower online streaming charges to 'help digital market'

But online radio station Pandora not persuaded by UK's 'highest publishing rates in the world'

The PRS (Performing Rights Society), the UK’s music fee collection body, has reduced its per-track play fee for online streaming services from 0.22p to 0.085p from 1 July. It’s hoped that the new pricing structure will lure Pandora and YouTube back to the UK market following both companies’ withdrawal last year. According to the PRS, the new price will ‘enable the digital market to grow’.

Pandora, a free personalised radio service that customises its playlists according to listeners’ tastes, had argued against the PRS’s ‘unworkable’ licence rates and was forced shut its service to UK users in January 2008 in the face of ‘licensing constraints’.

And earlier this year, YouTube failed to reach a suitable agreement with the PRS and so began to remove its premium music videos and performances from its site. The PRS, both companies complained, had, with their 0.22p fee, made it almost impossible for companies to sustain a profitable streaming service without passing on significant subscription charges to users.

Talking to bbcmusicmagazine.com, however, Pandora's founder Tim Westergren revealed that it was unlikely his company would be tempted back to the UK market. 'We applaud the fact that the PRS has reviewed and lowered the rates for online radio', he told us, 'but the sad reality is that the new prices… remain the highest publishing rates in the world for online radio.' Broadcast radio, he said, paid far lower fees than an online streaming service. 'Broadcast radio would not be commercially viable if it had to pay these rates, nor is ad-supported online radio.'

YouTube has yet to issue its own statement on the price change.

Under UK law, all companies wishing to stream music over the web are required to pay royalties to artists in line with the Copyright, Designs and Patents Act of 1988. Many argued, however, that the 0.22p rate was outdated and did not take into consideration the rate at which streaming services would grow following the rapid development of the internet over the past five years. The PRS, however, claims a new pricing structure was impossible until now: ‘In 2007 we published the proposed rates and there were a number of services who objected and so it went to a tribunal, who fixed the rates for a two-year period’, said managing director Andrew Shaw.