Consultation outcome

Extension of rights in sound recordings and performances to foreign nationals: Government response to consultation

Updated 5 November 2024

Summary

1. From January to March 2024, the Intellectual Property Office consulted on potential changes to UK copyright law. These concerned how foreign performers and producers of sound recordings (such as musicians and record labels) qualify for certain rights in UK copyright law. We have since considered the responses and evidence submitted to that consultation.

2. The government has now developed and decided to implement a new option, Option 0A. This will involve making a limited change to how foreign performers qualify for these rights, and no change to how foreign producers qualify for these rights. This document summarises the views we received at consultation, more detail on our chosen approach, and why we are taking it.

3. Alongside this document, we are publishing our revised assessment of the economic impacts of the options.

Background

4. UK copyright law gives producers of sound recordings the right to prevent others broadcasting their recordings or playing them to the public. Producers rely on these rights to secure licence fees from broadcasters, shops, restaurants, and other users of their recordings.

5. A producer qualifies for these rights in the UK if:

• they are a national or resident of, or a body incorporated under the law of, the UK or any country to which UK law extends these rights, or
• their recording was first published (or simultaneously published) in the UK or any country to which UK law extends these rights

6. Countries to which UK law extends these rights (or will shortly extend these rights) includes those that are party to either of the following treaties:

• the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (‘the Rome Convention’)
• the WIPO (World Intellectual Property Organization) Performances and Phonograms Treaty (‘the WPPT’)

7. Most producers of commercially released music qualify for these rights in the UK because they meet one or more of these conditions. This is the case even for many producers that are nationals of countries that do not provide reciprocal protection in their domestic law to UK producers or performers.

8. UK copyright law also gives performers a right to be paid ‘equitable remuneration’ when sound recordings of their performances are broadcast or played in public. This is typically interpreted as meaning that revenues from these uses are shared between the producer and performers of a recording on 50/50 terms.

9. These rights of producers and performers are sometimes referred to as ‘public performance rights’, or PPR.

10. Under UK law as it currently applies, a performer qualifies for PPR if:

• they are a national or resident of, the UK or another country which is party to the Rome Convention or the WPPT, or
• their performance took place in the UK or another country which is party to the Rome Convention or the WPPT

11. For some countries, this only applies to the extent that the country provides PPR to British performances. For example, many performances take place in, and are given by a national of, a country that is party to the WPPT but not the Rome Convention. If that country does not provide PPR to British performances, the performance would not qualify for PPR in the UK.

12. The basis on which performers qualify for PPR is narrower than the basis for producers. This means, in some cases, the producer of a recording qualifies for PPR while the performer does not. In these cases, the performer has no statutory right to a share of the revenues, which are retained in full by the producer (except where the performer is contractually entitled to a share of revenues, such as under the terms of a record deal).

Basis for consultation

13. The Intellectual Property Office consultation set out potential changes to the existing rules on qualification for PPR. There were two reasons we explored changes to the law in this area.

• the rules on how performers qualify for PPR were not consistent with the requirements of the treaties on copyright. These treaties have rules on who should qualify for rights, and UK law did not meet these. This is because some performers who should qualify for PPR under the treaties did not enjoy PPR in UK law
• a significant proportion of licence fees paid by UK broadcasters and public venues relates to music from countries that do not provide PPR to UK producers or performers. The consultation explored whether taking a different approach could ensure UK law is consistent with the treaties while also reducing costs for UK broadcasters and public venues, or increasing revenues for the UK music sector

14. The consultation set out several options and assessed them against the following objectives:

• ensuring that UK law is consistent with the international treaties on copyright and related rights to which the UK is party
• reducing costs to UK broadcasters and public venues, if this can be done without significant costs to the UK creative industries or UK consumers
• increasing revenues for the UK creative industries, if this can be done without significant costs to UK users and consumers

15. The options were:

• option 0: maintain the status quo. In other words, continue to provide PPR to foreign performers and foreign producers on the same terms as at present
• option 1: provide PPR to both performers and producers on broad terms. This would mean continuing to provide PPR to foreign producers on the same terms as at present, and expanding eligibility for performers so that, wherever a producer of a recording qualifies for PPR, so too would the performers of the recording
• option 2: provide PPR to performers and producers on ‘material reciprocity’ terms. Performers and producers would only qualify for PPR to the extent that the country of nationality of the producer provides PPR to UK producers. This would mean ceasing to provide PPR to many producers and some performers who currently qualify for it
• option 3: apply Option 1 to pre-existing sound recordings and performances and apply Option 2 to new sound recordings and performances

16. We sought views and evidence from respondents on whether changes to the law in this area are necessary, and the effects of these options.

Summary of responses to consultation

17. The consultation received 33 written responses from a range of interested parties. These included music and broadcasting sector trade associations, collective management organisations (which license rights on behalf of performers and rights holders), individual businesses and academics. These responses reflected a range of views.

18. Most respondents supported either Option 0 or Option 1. Those who supported Option 0 argued that existing UK law is compatible with the UK’s international obligations (or at least that it is not clear that the law needs to change). They also argued the other options would cause unnecessary and undesirable disruption and cost to UK rights holders, performers, and users of music.

19. Most who supported Option 1 argued that a change to the law is necessary to meet the requirements of the treaties. They considered Option 1 to be the fairest and least disruptive way of doing that. Some others did not agree that a change to the law was necessary, but nonetheless supported Option 1 as fairer than existing law. Many of these respondents said that the effects of Option 1 on UK parties would be small.

20. Almost all respondents raised concerns about Option 2 and Option 3. These focused on the complexity and uncertainty around administering these options and the costs this would bring. Respondents highlighted that, as certain foreign music would be unprotected under this option, it would be cheaper to play, and this would encourage UK users of music to play less British music in favour of this foreign music.  However, a small number of respondents supported Option 2. They argued it could benefit UK users, performers and rights holders, and remove one-sided benefits for countries that do not provide PPR to UK nationals.

21. We set out the views submitted in more detail below, by reference to the questions we asked in the consultation document.

Option 0: do nothing

Question 1. Do you consider the way UK law currently provides PPR to foreign nationals to be consistent with the UK’s international obligations, including those in the Rome Convention and the WPPT? Why or why not? If not, what are the changes needed to bring UK law into line with those obligations?

22. Respondents representing performers and creators tended to believe that existing UK law is not consistent with the UK’s international obligations. Some of these respondents provided detailed arguments in support of this view.

23. Others, especially those representing record labels, argued that existing law is compatible with the treaties. They pointed to the flexibilities in the treaties that allow parties to restrict eligibility for PPR where another party chooses not to provide it, and argued that the treaties do not prevent countries providing PPR to performers and producers on unequal or asymmetric terms.

24. Some respondents said that there was insufficient information in the consultation to allow them to provide a view on this point (but in some cases were sceptical of the need to change the law).

Option 1: provide PPR to producers and performers of sound recordings on a broad basis.

Question 2. Do you agree with the assessment of the impacts of Option 1? If you disagree, why?

Question 3. Do you have any other comments on Option 1?

25. There were a range of views on these questions and on the merits of Option 1.

26. Several respondents, including record label representatives and broadcasters, argued that it was incorrect to assume that this option would not significantly affect UK parties. They disagreed that it would only result in a redistribution of revenue among foreign performers and foreign rights holders. There were several grounds for this.

27. Some respondents noted that some UK record labels are affiliates or licensees of foreign (especially US) record labels, and they administer certain rights in the UK on behalf of those foreign record labels. These UK affiliates commonly retain a “significant and material” share of the revenues that are nominally attributable to foreign rights holders (BPI response). Under this option, a greater share of these revenues would be diverted to the foreign performers on these recordings. This would mean a reduction in the revenues retained by these UK record labels. In turn, these respondents say, this could mean less investment in British artists and music. The BPI said that its members retain an average of 30% of the revenues they collect in the UK on behalf of their affiliates. This suggests our initial estimates that costs would only fall on foreign (especially US) record labels were incorrect. Instead, a significant share of the costs under this and other options would instead fall on UK record labels, and this could reduce those labels’ investment in the UK music sector.

28. Some record labels noted that they work directly with US artists who currently only qualify for a limited form of PPR. This option would mean a greater share of PPR revenues for their music being paid to those artists, reducing revenue for the UK record label, which, again, could affect their investment in new British music.

29. Most record label representatives opposed Option 1 on these grounds, instead favouring the status quo. However, some smaller record labels supported Option 1, notwithstanding these costs. This was because they consider existing law to be unfair and the costs they would face to be small.

30. Broadcaster respondents raised concerns that rights holders would seek to pass on any costs they face under this (or any) option to licensees. Some pointed to recent changes to the law in the Netherlands as evidence of this. There, many foreign producers and performers have become entitled to PPR for the first time, leading to a significant rise in licence prices for users. These respondents also raised concerns about the effectiveness of the Copyright Tribunal as a means to challenge proposed increases to licence prices. These respondents called for confirmation from the government that this option, if adopted, would not lead to increases to licence prices.

31. Other respondents, primarily creators and performers, favoured Option 1. They argued that existing UK law is unfair to the performers who do not qualify for PPR, and incompatible with the treaties on copyright. They said that Option 1 would be the simplest, clearest, and fairest way of resolving this. Several of these respondents were of the view that this would have no or minimal costs to UK parties.

Option 2: Provide PPR to producers and performers of sound recordings on material reciprocity terms

Question 4. How will/ should licence prices for the broadcasting and public playing of recorded music change under this option?

Question 5. What would be the benefits of savings for UK broadcasters or those that play music in public under this option?

Question 6. What would be the benefits or costs in terms of increased or reduced remuneration to UK record labels and performers under this option?

Question 7. What upfront and ongoing administration and legal costs (such as the costs of renegotiating licences) might arise under this option? Can you quantify these?

Question 8. Do you think this option will cause users to reduce the amount of UK music they play? If so, why, and to what extent will this effect take place? How will this affect the UK music industry?

Question 9. How might the costs on foreign (especially US) record labels under this option indirectly affect the UK music industry or UK consumers?

Question 10. Do you have any other comments on Option 2?

32. Most respondents opposed Option 2 and there was broad scepticism about the government’s modelling of the effects of this approach. Some respondents provided data to improve the quality of this modelling (such as data on the country of origin of music played in the UK). Generally, respondents considered it difficult to accurately and precisely assess the effects of this option.

33. Some broadcasters consider it unlikely that this option would lead to any reduction in licence prices. In part, this is because these broadcasters typically purchase ‘blanket licences’, covering not only broadcasting but also other uses of music (such as on-demand streaming, for catch-up services). Even where some music ceases to be protected against broadcasting under this option, it would still be protected against those other uses, and so these users could not opt-out altogether of purchasing licences for this music.  These respondents were of the view that rights holders would seek to balance any reduction in income in one area (broadcasting) with increased prices in another (such as on-demand streaming). They also noted that renegotiating licence prices, or referring a claim to the Copyright Tribunal, would lead to significant administrative and legal costs for users.

34. One respondent, Radiocentre, argued that, while licence prices may reduce under this option (benefitting UK broadcasters and consumers, through more listening options and increased investment in services), this would be very unlikely to go so far as to negatively affect UK rights holders (who would enjoy a larger share of the pot of remaining revenues).

35. Broadcasters disputed that they would reduce the amount of British music they play under this option. The BBC noted that its Charter requires it to play minimum levels of British music. Radiocentre argued that radio stations’ music choices are generally determined by audience preferences and that, if music licences were to become cheaper under this option, this could lead to broadcasters increasing the amount of music (including British music) that they play.

36. Rights holders, performers and creators took different views to broadcasters. They generally considered it more likely that users would reduce the amount of British music they play under this option. Instead, they argued, users would favour foreign music that is not protected under this option, given the clear financial incentive for them to do so. They considered this would decrease overall licensing revenue. Some respondents speculated that services may emerge under this option that offer unprotected music to users to allow them to avoid licensing fees. This could include online playlists for use by hospitality venues of music that does not require a licence from PPL, the UK collecting society for record labels and performers. Several of these respondents also objected in principle to the idea of not protecting certain music. They suggested this would be damaging to the perception of the value of copyright and creative works.

37. Many respondents also raised concerns about the complexity of administering and enforcing this option, as well as the costs of negotiating licences. PPL said that this option would cause significant increases in its operational costs.

38. Radiocentre, which supported Option 2, argued otherwise. They considered any increase to administrative costs for UK record labels and performers would be outweighed by them retaining a larger share of licensing revenues.

39. Some respondents also noted that some UK musicians work with US record labels and so would lose out if those recordings cease to enjoy PPR in UK law. Similarly, respondents again noted the affiliate relationships that exist between UK and US record labels, which mean that a reduction in revenues for foreign record labels would lead to a reduction in revenues for UK record labels, which could in turn restrict investment in new British music and artists .

Option 3: Apply Option 1 to pre-existing sound recordings and performances, and apply Option 2 to new sound recordings and performances

Question 11. How will/ should license prices for the broadcasting and public playing of recorded music change under this option?

Question 12. What would be the benefits of savings for UK broadcasters or those that play music in public under this option?

Question 13. What would be the benefits or costs in terms of increased or reduced remuneration to UK record labels and performers under this option?

Question 14. What upfront and ongoing administration and legal costs (such as the costs of renegotiating licences) might arise under this option? Can you quantify these?

Question 15. Do you think this option will cause users to adjust the amount of UK music they play? If so, why, and to what extent will this effect take place? How will this affect the UK music industry?

Question 16. How might the costs on foreign (especially US) record labels under this option indirectly affect the UK music industry or UK consumers?

Question 17. Do you have any other comments on Option 3?

40. Many of the points made by respondents in relation to Option 2 were echoed for Option 3. Creators, performers and rights holders raised concerns about reductions in overall licensing income for the UK music sector. They also highlighted the risks of users choosing to play less British music in favour of foreign music. Broadcasters were sceptical about their ability to secure any meaningful reductions in licensing prices under this option.

41. However, particular concerns were raised around the added complexity, confusion, and uncertainty associated with administering and enforcing Option 3, as users, rights holders, and collecting societies may need to consider not only the country of origin of a recording but also when it was made. Several respondents also highlighted that the potential benefits of this option would be smaller than under Option 2. This is because the restriction on eligibility for PPR in Option 3 would only initially affect a small proportion of repertoire.

42. Overall, there was little support for Option 3, and concern over the effects on the UK music sector.

The government’s intended approach

43. The responses to this consultation have helped us to better understand the likely effects of these options. As a result, some of our estimates of the costs and benefits of the options have changed significantly.

44. We originally estimated that Option 1 would have minimal direct impacts on UK rights holders, creators, users, or the public. Instead, we anticipated that it would merely redistribute revenues between foreign rights holders and foreign performers. In light of the evidence at consultation, we have revised this assessment. We now estimate Option 1 would reduce UK record labels revenue by £7.4 million per year (over the 2025-2034 period), compared to maintaining existing law. This equates to an approximately 5.3% reduction to UK record label annual profits. In turn, this is likely to have some effect on these record labels’ abilities to invest in new British music and artists (although the relationship between changes in revenue and changes in investment is challenging to define). Less investment by UK record labels could undermine the quality or quantity of British music enjoyed by the public.

45. For Options 2 and 3, there remains substantial uncertainty on our estimates. This is largely because it is unclear how music licence prices would adjust and to what extent users would reduce their consumption of British music. On present evidence, these options could provide some benefits to the UK by redistributing some revenue from some foreign rights holders to UK parties. However, we expect them to lead to some costs for at least some UK record labels and performers, and there are real risks of significant costs for the UK music sector as a whole. Such costs could, as with Option 1, undermine investment in new British music and artists. For this reason, the government does not intend to adopt Option 2 or Option 3.

46. In light of the risks of Options 1, 2 and 3, and the arguments raised by respondents about the requirements of the copyright treaties, we have given further consideration to the need to change the law in this area.

47. The government remains of the view that existing law is inconsistent with some of the UK’s international commitments. However, we believe that this inconsistency can be resolved through more limited changes to the law than the options on which we consulted.

48. We have identified a new option (referred to as Option 0A in the impact assessment accompanying this document and hereafter) that we consider would enable us to ensure UK law is consistent with the requirements of the treaties.

49. This new option would mean:

• continuing to provide PPR to producers of sound recordings on the same terms as at present
• providing PPR to performers on the same terms as at present, except to additionally provide these rights to performers where the producer of the sound recording of their performance is a national of the UK or certain other countries, including any country that is party to the Rome Convention

50. In practice, this means a limited change to existing law. Some more foreign performers would qualify for these rights, but there would continue to be circumstances where a producer of a sound recording qualifies but the performer involved does not. As set out in the impact assessment, this will result in some costs to UK record labels. There will also be some upfront and ongoing administrative costs to the music sector, as this option will involve changes to the data and distribution practices of collecting societies.

51. However, we expect these costs to be small. The direct costs to UK record labels under Option 0A are estimated to be around £1.4 million per year. This is unlikely to have any significant knock-on consequences on, for example, investment in new British music. We expect the overall costs of this option to the UK music sector to be significantly less than, for example, the costs under Option 1.

52. In light of these points, the evidence received at and after consultation, and our revised assessments of the options, we intend to adopt Option 0A. This will allow the UK to satisfy its international commitments, while mitigating or avoiding the costs and disruption that would otherwise arise under the other options under consideration. This approach should not significantly undermine the continued investment by UK record labels into new British music and artists (as is a risk under the other options). It should also have no significant impact on users or consumers. We believe this approach best balances the interests of performers, rights holders, users, and the public.

Implementation

53. We will implement Option 0A through secondary legislation made under existing powers in the Copyright, Designs and Patents Act 1988 (the CDPA). This will involve amendments to the Copyright and Performances (Application to Other Countries) Order 2016 and the Copyright and Performances (Application to Other Countries) (Amendment) Order 2024 (the 2024 Order).

54. In practice, this will mean restricting how some of the changes to the CDPA made by the Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Act 2024 (the CPTPP Act) apply to eligibility for PPR for performers. The CPTPP Act amends section 181 of the CDPA to introduce new grounds on which a performance may qualify for protection (such as a performance being included on a sound recording that was first published in certain countries). Our implementing legislation will provide that some of these grounds for qualification do not apply, or only apply in some cases, in relation to PPR for performers.

55. These changes will take effect on the date that CPTPP (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) comes into force for the UK. This will be in mid-December 2024, and is the same date that the relevant changes to the CDPA in the CPTPP Act and the 2024 Order are due to take effect.

56. We intend to table this legislation in Parliament in the coming days.