In order to operate lawfully, i.e. without infringing copyright, an online music service will usually need to obtain the required permissions from rightsholders in relation to the works (i.e. compositions and lyrics) and the sound recordings. To clear the rights in the works, the online music service will generally need permission for two main rights; the performing (i.e. communication to the public or making available) right and the mechanical right.
Where a writer has a publisher, these rights are governed by the terms of both:
- the writer’s publishing agreement
- the writer’s and/or publisher’s arrangements with collection societies.
PRS members who are published typically assign 100% of the mechanical rights and the right to receive 50% of income from the performing rights to their publisher, whilst the remaining 50% is distributed to the writer through PRS.
In the context of pan-European licensing, the combined rights are typically licensed together through the relevant “Option 3” (defined below) licensing vehicle with the “publisher’s share” going straight to the publisher and the “writer’s share” going to PRS for distribution on to the writer.
Regardless of who you are published by, as a PRS member, there will be one licensing entity licensing your rights for online music services like Spotify, that operate on a multi-territory basis. This is because in 2005 the European Commission recommended that rightsholders should have choice over their administrator for these types of services, when operating in Europe (to clarify, an administrator does the administrative work necessary to collect, process and distribute royalties to writers and publishers). This is sometimes referred to as “Option 3”.
If you have appointed PRS to look after your online rights:
- PRS distributes your registered share of the performing rights to you; and
- you can raise queries about the distribution of your royalties with the PRS membership team
This happens regardless of whether these royalties have been collected under a PRS for Music licence or an Option 3 licence.
Since the Option 3 recommendation was made, PRS has been at the forefront of investing in the technology needed to manage online rights across Europe and was one of the first collecting societies to do this. More recently, along with our partners, the Swedish and German collecting societies STIM and GEMA, PRS established ICE, a market leading licensing and administration hub for multi-territory online music services. Amongst other repertoires, ICE will be licensing the repertoire PRS directly represent and administering any Option 3 licences that PRS for Music previously looked after.