Press Release: PRS WRITER MEMBER LAUNCHES LEGAL ACTION AGAINST PRS FOR MUSIC ON BEHALF OF OVER 160,000 PRS WRITER MEMBERS

The basis of the alleged Claim

Whenever a song is played publicly or broadcast, the third-party entity performing the song (e.g., radio station, online music service, restaurant, bar/nightclub, etc.) must pay performing right royalties as a matter of intellectual property law. Royalties are owed both to writers and their publishers, and performers and record companies. This legal action is focused only on performing right royalties owed to writers.

Under PRS rules, royalties from public performances and broadcasts are shared on a 50:50 basis between writers and publishers. However, certain royalties (where data is missing or incorrect) are distributed to a general pool, referred to as ‘Black Box’ income.

The value of the ‘Black Box’ is distributed across all writers and publishers on a “pro rata” or “market share” basis. It is alleged that market share distribution is set up to favour publishers, who receive a large portion of the ‘Black Box’ income that is in fact owed to writers.

There is no transparency regarding the market share distribution of ‘Black Box’ income. Writers are in an unenviable position: the accuracy of their royalties largely depends on others.

Crucially, if there is a data error, it is difficult for writers to verify the accuracy of their data or the royalty payments.

The precise extent of PRS’s ‘Black Box’ is hidden, although it is considered to represent a significant portion of PRS’s annual turnover.

One of the collateral benefits of this legal action is that it will shine a light on the industry’s ‘Black Boxes’. PRS will be obliged to fully disclose its scale and practices and the overall alleged unfairness of its calculations.

The proposed class representative is David Rowntree, who said: “I’ve agreed to be Class Representative because musicians’ royalties, perhaps to the tune of hundreds of millions of pounds, have been paid to the wrong people. It’s because of bad data and processes, and in today’s digitally connected world, there’s no excuse for either.”

The claim alleges that ‘Black Box’ income represents a significant portion of PRS’s annual turnover. It is also alleged that the majority of ‘Black Box’ income belongs to writers, but that a material portion of the writer ‘Black Box’ income is paid to publishers.

Notes to Editors:

To learn more, or for updates, visit the dedicated website for this Claim at www.PRSsongwriterclaim.co.uk or the Competition Appeal Tribunal website at www.catribunal.org.uk.

How the Claim is structured: This legal action is structured as an ‘opt-out’ legal claim, meaning that all 160,000 writer members of PRS since March 2017, who reside in the UK, are automatically included within the class and can share in any future award under the Claim (but they can opt out if they wish to).

Writer members of PRS since March 2017, who do not reside in the UK, are not automatically members of the class (under the law), but they can still ‘opt in’ to the Claim and share in any future award. Details on how they can opt in can be found at the PRS claims website above.

This Claim is only for writers. It is important to note that writers may or may not be the same as the performers playing the music. Royalties are paid and collected separately in respect of performers. In the United Kingdom, PRS licences music and collects royalties on behalf of writers and publishers. In contrast, Phonographic Performance Ltd (“PPL”) licences music and collects royalties on behalf of performers and record companies. This Claim does not involve PPL.

March 2017 is the key starting point for this Claim because the “Damages Directive” provides that limitation may be extended beyond the usual 6 years in the case of an ongoing infringement of competition law.

How the unfairness to writers arises: It is industry practice for publishers to notify PRS who the rights-holders are for each song they publish. PRS registers rights according to members’ “interests” in songs, and the division of royalties for any given song is coded in a database via an “Interested Party Name/Number” (“IPN”), assigned by PRS.

IPNs can in practice be chaotic. For example, the data entrant at PRS could misspell a name and therefore create another IPN believing that the misspelled name was a distinct artist. The individual involved would not likely be able to check for errors. To provide an example of data entry going awry, a well-known four-member pop group had 22 IPNs due to incorrect spellings of their names. Misspellings are one cause for writers not being rightfully paid ‘Black Box’ income.

How the Claim is funded: Litigation funding has been secured from LCM Funding UK Limited, a highly experienced third-party litigation funder, meaning that legal fees are covered and insurance is in place to cover adverse costs. Exton Advisors provided advice and brokerage services on the funding and insurance. The lawyers are working on a conditional fee arrangement. While class members would only in exceptional circumstances be responsible for PRS’s costs in the unlikely event that the Claim should not succeed, specialist litigation insurance has in any event been taken out to protect class members from this responsibility. LCM will be paid a share of any award under this Claim, and class members will be able to obtain details from the class coordinators at the appropriate time to recover their share of the damages recovered.

Who’s who: The proposed class representative, David Rowntree, is a professional musician, writer, broadcaster, and politician; perhaps best known for being a drummer for the pop band, Blur. To represent the nearly 160,000 UK writer members in the Claim, David has agreed to give up his time to act as the proposed class representative. He will not be paid anything for his time.

It is perhaps not widely known that David is also a qualified solicitor (currently non-practicing) specialising in criminal law. Since this class action is a civil matter in competition law, David has sought specialist advice.

On behalf of the class, David has retained a competition law firm, Maitland Walker LLP (where Julian Maitland-Walker and Adrian Render lead the case): Maitland Walker will also act as coordinators for the class. Maitland Walker has, in turn, engaged specialist competition law barristers Mark Brealey KC (Monckton Chambers); David Went (Exchange Chambers), as well as a specialist intellectual property barrister, Thomas St Quintin (Hogarth Chambers) to act on behalf of the class.

For further information, please contact:

Richard Elsen

Richard.elsen@farraline.com                                                                       +44 7886 757 307