The following op/ed comes from Camilla Waite, General Counsel of UK music licensing company PPL (pictured inset).
Waite takes a closer look at the British government’s consultation on potential changes to how foreign sound recordings and performances qualify for broadcasting and public performance rights in the UK, with potentially significant implications for the collection and distribution of licensing revenues.
Copyright law is referenced frequently in the industry press these days due to high-profile copyright infringement cases and industry debate around matters such as the economics of music streaming or the use of AI.
The statutory rules that govern sound recording copyright and performance qualification have not been much of a topic for industry comment. However, they have recently been put under the spotlight with the UK government taking preliminary steps to amend its rules.
These reforms have potentially significant implications, particularly for owners of US repertoire and for US performers.
In January, the UK’s Intellectual Property Office (IPO) published a consultation paper proposing changes to the qualification rules for the public performance and broadcasting rights (PPR) in sound recordings and recorded performances. The stated objective of the IPO is to obtain greater consistency between the treatment of foreign record labels and performers and ensure compliance with the UK’s international commitments.
The consultation, which closed on 22 March, invited interested parties to comment on different proposals for amending the existing rules.
How does this work currently?
The current UK statutory rules on PPR qualification seek to apply the following two principles:
- Reciprocity – the UK will protect rights-holders from a foreign country to the extent that UK rights-holders are protected in that country
- National treatment – where a foreign country is a party to a relevant copyright treaty, and subject to any exceptions in that treaty, the UK will protect rights-holders from that country to the extent that UK rights-holders are protected in the UK.
The UK has had to apply these principles, which can lead to different results, in the context of its obligations under international treaties such as the Rome Convention and the WIPO Performances and Phonograms Treaty (WPPT).
The current position under UK law is that sound recordings generally qualify for PPR. These rights are generally licensed in the UK by PPL, which distributes the net revenues to recording rights-holders and performers.
UK law provides a statutory right to equitable remuneration for performers in respect of PPR and they qualify for that right by reference to the country in which they gave their performance or their country of nationality (or residence). Under the current statutory qualification rules (which PPL has to follow when making distributions of net PPR revenues) performers relying upon several key countries for qualification may not be entitled to equitable remuneration in all circumstances.
In particular, performances linked to some countries are subject to a ‘mirror test’ under which the protection for foreign performances is limited to the extent to which UK performances are protected in the relevant foreign country.
As a result, US performances do not qualify for all PPR revenue streams. The application of the ‘mirror test’ means that they only qualify for equitable remuneration for non-interactive digital transmissions such as simulcasts or linear webcasts, the same revenue streams for which British performances are paid in the US. For performances relying upon Australia for qualification, the result of the ‘mirror test’ is that there is no equitable remuneration at all.
However, US and Australian performers will qualify for equitable remuneration for a particular performance in all circumstances if they were resident in the UK or a qualifying country (i.e. one that is a party to the Rome Convention or WPPT and which does protect UK performances for all PPR) at the time that their performance was recorded, or if their performance was given in such a qualifying country.
Where a performer provides a nonqualifying performance to a sound recording (as is the case for many US or Australian performances), the share of revenue that would otherwise be payable to the performer (if that performer qualified) remains with the relevant recording rightsholder.
The context for the consultation
The consultation follows several important developments in respect of the international laws relevant to the qualification rules.
Firstly, in its 2020 decision in the RAAP reference from the High Court in Ireland, the Court of Justice of the European Union ruled that, as a matter of European Law, the Member States were not permitted to apply a reciprocity model to the right to equitable remuneration.
The Court recognised the potential public policy justification for such a model and the EU Commission has recently been considering whether to amend the relevant EU Law provisions.
The EU Commission has stated that this is to ensure a level playing field and to incentivise non-EU countries to increase their protection of foreign rights-holders. The EU Commission ran a consultation on this issue last year.
The decision in RAAP also prompted various US parties to issue proceedings against the UK government in 2022, seeking damages for not providing US performers with full rights to equitable remuneration for PPR.
Secondly, as part of various trade deals completed after Brexit, the UK signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Legislation currently before Parliament would introduce a new route to qualification for all rights in recorded performances (not just PPR), linking qualification to the countries of authorship and publication of the relevant sound recording. Related secondary legislation would make CPTPP countries such as Australia fully qualifying countries for performers’ equitable remuneration.
The government is further ahead with the CPTPP legislation than with the IPO’s consultation – and so there may be a perception that the introduction of the new test for performer qualification is pre-judging the outcome of the consultation or, at least, changing rules that may need to be changed again. However, the government’s intention is for the outcome of the consultation to be implemented at the same time as the CPTPP legislation comes into force.
What are the options on the table?
It is within this context that the IPO is seeking to review the current law on performance and sound recording qualification for PPR, presenting four options in its consultation paper:
- Option 0: maintain the status quo. Option 0 is the IPO’s terminology in consultations for a ‘no change’ option. So essentially US performances would not qualify for equitable remuneration for PPR, save for the digital revenue streams identified above, unless the performer can show that their performance was given in a qualifying country or that they were a national or resident of such a country at the time of that performance. While adoption of the “no change” option would not reverse the change for performances linked to CPTPP countries such as Australia, it would require legislation to stop the new performance qualification test affecting the qualification rules for equitable remuneration for PPR.
- Option 1: broad protection. The ‘mirror test’ would be removed for performers relying on Rome Convention or WPPT countries for qualification for equitable remuneration. In particular US recordings would continue to qualify for PPR and US performers would qualify for PPR in all circumstances (not just digital transmissions). This change would be applied to performances on both pre-existing and future sound recordings.
- Option 2: reduced protection. This option would apply a ‘mirror test’ for both sound recordings and performances in respect of PPR. US recordings would not qualify for payments from PPL, save in respect of the digital simulcast and linear webcasts (the revenue streams for which US nationals currently qualify for equitable remuneration). This would mean that the performers on those recordings, including UK performers, would also only receive such limited payments on US repertoire.
- Option 3: hybrid approach. This option applies Option 1 for existing sound recordings and Option 2 for new sound recordings.
There are a range of views from across the industry as to the relative merits of Option 0 (no change) and Option 1 (broad protection). The IPO states in its consultation paper that it is not in favour of Option 2, due to the disruption that it would cause. At PPL we would very much echo those concerns in relation to both Option 2 and Option 3, given the risk of considerable uncertainty, complexity and administrative costs in the licensing and enforcement of PPR that both options would likely introduce.
The next steps
The consultation closed on 22 March and is expected to be followed by a technical consultation on the wording of any statutory instrument that may be needed to implement the outcome of the consultation. As noted above, the aim is for any outcome to coincide with the implementation of the CPTPP amendments to the qualification rules.
