PPL chief defends plans to raise fees

By Gurjit Degun

- Last updated on GMT

Related tags: Ppl, Price, Economics

Defending fees: PPL's Peter Leathem
Defending fees: PPL's Peter Leathem
Anyone who demands money from you is never going to be popular. In a struggling economy it’s even worse — utility cost increases are never ending, rents are harder to negotiate and business rates have a habit of rising just when you think you are up to date with your finances.

So when yet another organisation suddenly announces proposals to increase its fees by up to 4,000%, it is understandable why so many licensees are angry.

Since PPL began a consultation into the proposed hikes last year, it opened itself up to floods of criticism. Late-night operators said they would have to close because they rely on the music to run the business, and the trade has teamed up to raise between £250,000 and £300,000 to fight the proposed charges.

It’s something that PPL chief executive Peter Leathem believes has helped unite trade bodies that often fight each other over the beer tie.

Under-valuing music

Under-valuing music The proposed changes came about after an independent valuation of the importance of music to late-night venues.
The survey found that PPL had underpriced music in the past. “We’ve always had concerns about how the tariff works and also about the value of that tariff,” says Leathem.

 “On average, a late-night bar doing SFEs (specially featured entertainment such as DJ nights and discos) with more than 100 people is paying about £15 for the event. A nightclub with about 200 people is paying £25 for the event.

“That exercise (the independent valuation) had consumers attaching a much higher value to the music element of that package than is currently priced into our tariffs. “So we went out to the market to consult and showed them the [proposed new] tariff.”

It seems reasonable, but parting with so much more money usually means that you’ll receive a better product. After all, publicans are not to blame for PPL under-pricing its offer. Unfortunately, licensees won’t be getting anything extra for digging deeper into their pockets.

“If you have priced something at a particular point and you then want to change it upwards, it’s a problem,” admits Leathem. “It is tricky to identify what additional value you are giving because you are not effectively giving additional value. We’re saying that we think our price was wrong in the past.”

Venues facing multiple challenges

“I completely understand why the higher price we are proposing has gone down like a lead balloon,” says Leathem.

“At the end of the day, we are not trying to do something that will overprice anything, or is unfair. We’ve spent an enormous amount of time trying to come up with things that are fair and robust. We have put all of the research out there.

“We’ve got to represent our own performers and try to make sure that we are doing a fair job of trying to value what their assets are.”
And according to PPL, 97% of pubs pay PPL £119 per year for the background music in their premises, which Leathem explains is just a little over £2 per week.

Despite reports in the Publican’s Morning Advertiser about venues that will have to close down if the increased fees go ahead, Leathem does not think that an increase in SFE fees will be the only cause of venues closing, nor does he believe that the proposed fees are over-priced.

Instead, he points to other issues in the trade, such as an over-saturated market, that could cause problems for the venues: “The challenge is oversupply in the marketplace. We visited a provincial town as part of the consultation and saw that there were just far too many late-night venues. The town used to have three late-night venues, and it now has about 15.

“I’m trying to point out that there are many challenges out there and we understand the difficulty of us coming in and suggesting that we might not be at the right price point.”

He also highlights the struggles the music industry is facing: “The money that we collect is incredibly important to a music industry that itself is under significant pressure.”

Changes to be phased in

Leathem maintains that PPL is not trying to catch anyone out by suddenly announcing an in- crease in its pricing — any new fees will be introduced steadily.

“We have given ourselves a year for consultation and then we’ll decide what to do with changes,” he says. “Any changes will be ‘transitioned’ in. There won’t be any attempts to sneak up on pubs — they will get plenty of notice.”

PPL claims that it is fully committed to the consultation on the proposed SFE fees

Last week, the Publican’s Morning Advertiser reported that PPL is “unlikely” to reduce the fees it has proposed.

Peter Leathem responds: “Let me make it clear, to avoid any misunderstanding, that it was in answer to an earlier question in regard to our existing tariff, I was saying that it was unlikely that there would be a reduction.

“It was not in connection with any future tariff that is yet to be agreed.

“What we have done is to allow the consultation process to continue throughout 2012 and we are having constructive meetings with the associations, for which I thank them all.”

PPL-Music-Logo

What does PPL do?

PPL is a not-for-profit agency that issues licences to businesses and organisations from all sectors in the UK that play recorded music and/or music videos in public.

It collects licence fees on behalf of performers and record companies.

Licensees need to pay for all types of music they play in their pub. Typically, for background music it should cost around £119 per year.

To host specially featured entertainment, such as discos, there is a different charge. This depends on the number of customers in the venue. PPL is now looking to bring in a new tariff of charges for this.

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