Following consultation and months of negotiation, the Government has announced that the Phonographic Performance Limited ("PPL") licensing exception available to third sector organisations under the Copyrights, Designs and Patents Act 1988 is to be abolished. The statutory instrument, the Copyright, Designs and Patents Act 1988 (Amendment) Regulations 2010 (S.I. 2010/2694) was laid before Parliament on 8 November 2010.

This means that public venues, used by charities and other non-for-profit organisations, and in which music is played, will require licences from two copyright collecting societies – PPL and the Performing Right Society ("PRS").

PRS is the copyright and royalty collecting society for songwriters and composers. The proceeds of PRS licences help to enable music creators to earn a living and to continue writing music. However, while third sector organisations have always been required to pay for a PRS licence, the new proposal adopted by the Government will require charitable organisations to pay an additional fee for a PPL licence.

PPL is another music licensing and collecting society. However, PPL collects on behalf of performers and record companies, as opposed to writers and composers.

After consultation and negotiation between the various stakeholders, it has been agreed that:

  • Certain third sector organisations will be exempt from the new PPL system for the first year following implementation, giving them until 1 January 2012 to prepare.
  • The applicable PPL tariff will depend on an organisation's "defined income". However, the lowest PPL tariff of £40 per annum is estimated to cover more than 60 per cent of the buildings used by third sector organisations.
  • Furthermore, a new independent review body will be created to address the complaints of those who believe they have been treated unfairly by the PPL.

Despite the extra licence now required, the Government insists that charities should not face a corresponding increase in paperwork and bureaucracy, as the PPL and PRS have announced their intention to pilot a joint licensing scheme for the third sector. This will enable charitable organisations to pay both collecting societies in one transaction.

While controversial, the removal of the PPL exemption brings the licensing system in the UK broadly into line with the rest of Europe; affording performers and record companies the same rights as songwriters and composers.

The move will lead to an increase in the expenses incurred by third sector organisations; however, Minister for Civil Society, Nick Hurd, believes that the measure has achieved "a fairer balance between the need to reward musicians for their work and the need to protect charities from excessive costs and additional bureaucracy."