The industry bodies’ challenge was revealed as Best Bar None chairman and Association of Conservative Clubs chief executive by Lord Smith of Hindhead, who took aim at the Phonographic Performance Limited (PPL) in parliament.
“PPL collected £250m in fees last year, raked off some £35m in administration fees and paid its chief executive a package worth £786,000,” Lord Smith explained. “If PPL wants to provide copyright holders with a better return, it should perhaps look at cutting its own expenditure.
“The proposed new SFE (specially featured entertainment) tariff fee is frankly outrageous, and potentially damaging. The hospitality industry is the third-largest private sector employer and returns significant sums to the Exchequer.
“This proposed increase is a slap in the face for hard-working businesses and is contrary to the Department for Digital, Culture, Media and Sport’s recent call for the music industry to step in to help venues that play music.”
£49m industry cost
The SFE tariff – which the PPL states relates to the playing of recorded music in public at events such as discos and DJ nights and applies to nightclubs, pubs, bars, cafés, restaurants and hotels – will be enforced from 1 July following a consultation between July and October 2018.
The additional tariff would apply to any event where recorded music is played at a nightclub, pub, bar, restaurant, café or hotel as “featured entertainment”, played by a DJ, and where there is dancing, or provision for dancing, at a venue.
Though the fee will increase in direct proportion to the size of an audience, it is estimated that it will see the SFE licence cost increase by 130% on average for music playing hospitality venues – potentially costing businesses £49m according to figures from UKHospitality.
Discussing the challenge, BBPA chief executive Brigid Simmonds commented: “BBPA and UKHospitality have been discussing changes to this tariff with PPL for 18 months.
“Unfortunately, it’s now pushing ahead with increases in excess of 120% over the next four years, which we believe are unjustified.
“As a sector, it is only right we challenge this and the support of Lord Smith is extremely welcome.”
UKH chief executive Kate Nicholls added: “Significant increases to PPL’s tariffs will be devastating for many venues already struggling to cope with increasing costs. Margins are shrinking, costs are increasing and many venues simply are not going to be able to pass these costs on or swallow them. A huge hike in PPL fees will mean some businesses will be strangled and there will be much less choice for customers.
“UKH has been leading the fight to ensure that any increases remain fair, proportionate and affordable. That is why we are spearheading a legal challenge, alongside the BBPA to make sure that fees cannot be arbitrarily raised to exorbitant levels. Pushing PPL fees sky-high does nobody any favours. If venues can no longer afford the cost of a licence, PPL is, ultimately, shooting itself in the foot.
“A constructive relationship between ourselves, PPL and venues is mutually beneficial and we will continue to work towards that. We all have the same goal of seeing as many people as possible enjoying themselves and their favourite music in nightclubs, bars, pubs and other venues. We all need to be working harmoniously, and that means not gouging venues unfairly.”