Pandora: why they aren't in the UK
Posted on Monday, April 2nd, 2012 at 5:59 pm. #
Tim Westergren’s piece the other week in paidContent was an interesting one, since it (albeit with some very dodgy statistics, and a disappointing attempt to slag off the entire UK radio industry) tried to claim that PRS’s fees were unrealistic. He said:
“PRS’ demands effectively deny songwriters and artists a new income stream and deny U.K. consumers access to services that would enable them to discover and enjoy music they love.”
Of course, Tim knows that it’s not just PRS, but PPL who you also need to talk to. PPL represent the record companies, PRS represent the musicians and songwriters. And I suspect it’s not just PRS who’s “demands” are a litte high.
PPL tell me that “0.0796 pence per-track-per-stream was the published rate of PPL’s Customised Webcaster Licence in 2011″. They don’t publish this figure online. PRS’s website quotes a rate of 0.065 pence per-track-per-stream. So, if you were running Pandora in the UK, you’d pay a total of 0.1446 pence per track played on music bills. According to a Twitter conversation, 15 songs would be a sensible amount of songs to play per hour, assuming a light ad-load and no presenter or news. So, an hour of Pandora would cost them, on their PRS and PPL bill, 2.169 pence per listener, per hour.
The RAB have published that commercial radio annual revenue based on Q4 2011 was £532.5m. RAJAR reports that Q4 2011 had a total of 479,856,000 hours per week spent to commercial radio; or 25,021,062,857 hours a year. So we can work out that commercial radio revenues are 2.128 pence per listener, per hour.
Our commercial radio industry is excellently run against a strong (and commercial-free) BBC. It has existed since 1973, and is in growth. It has nearly 40 years experience in talking to ad agencies and is an integral part of the media spend for Britain’s biggest brands. It has tremendous scale, reaching 63% of the population a week: it’s larger than any online service (by comparison, BBC.co.uk, the UK’s largest website, reaches 41.8% of the population a week).
Yet to run a service like Pandora online, the UK music rights bodies would like more money in music fees than the entire radio industry earns in total revenue. And that’s before Pandora have paid for any staff; for bandwidth; for marketing; or tax.
Tim might have got his statistics hopelessly wrong; and might have disappointingly slagged off the UK radio industry in order to make a point. But his central argument – that the UK music rights bodies are charging too much to make a viable service – would seem to be absolutely right.