UK cuts cost of on-demand music

Posted on 26 May 2009 at 11:33

The main UK royalties agency has made a significant cut in the cost of streaming music over the web.

PRS for Music has reduced the Minima rate by 60%; the per-stream royalty rate falling from 0.22p to 0.085p. The change comes into effect on 1 July.

Andrew Shaw, Managing Director of Broadcast and Online at PRS for Music said the change will have universal benefits.

“We believe these new streaming rates will stimulate growth in the digital music market …. This is a good deal for music creators and for music lovers.”

In return, PRS has raised the Headline Royalty Rate, but it is the change kin the Minima rate that Steve Purdham, chief executive of We7, was needed.

“On first look the announcement is very positive and could be a significant milestone in the future of British digital music distribution,” he told Music Ally. “All prior feedback were that the online rates, especially in streaming for on-demand and Internet radio, were wrong and the Minima’s where the key issue and a barrier to the evolution of new digital models.”

The change may also be necessary to help offset a projected fall in revenue for free, advertising-funded services such as We7.

Dr Windsor Holden, principle analyst for Juniper Research says that as a result of cuts in advertising budgets, “those music services launched using an ad-funded model face a potential shortfall in revenue: under the worst case scenario, it warned that adspend could reach just 50% of pre-downturn estimates.”

Author: Simon Aughton

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