A UK judicial tribunal has rejected a proposed class action lawsuit against performance rights organization PRS for Music over how it distributes “black box” royalties, i.e., royalties owed on songs whose rightsholders haven’t been properly identified.
In a judgment issued on Wednesday (August 27), the Competition Appeal Tribunal dismissed the proposed class-action lawsuit that had been brought on behalf of PRS’ 165,000 songwriter members by Blur drummer Dave Rowntree.
It concluded that because songwriters are not “owed” black box royalties, the class doesn’t have a legitimate claim under UK law. It also concluded that Rowntree’s lawyers hadn’t proposed an alternative to PRS’ method of distributing black box royalties, and doubted that the “cost-benefit” ratio of the lawsuit made sense, given that PRS is a not-for-profit owned by its publisher and songwriter members.
“The central problem is that the class is, in a manner of speaking, suing itself,” the tribunal stated in its judgment, which can be read in full here.
Rowntree’s lawyers argued that PRS’ method for distributing royalties is unfair to songwriters. In certain cases, black box royalties are distributed to PRS members on a pro rata basis. But Rowntree’s lawyers argued that, in effect, this favors publishers over songwriters, particularly when it comes to international collections – royalties handed over to UK rightsholders by collection societies in other countries.
Because publishers often make separate arrangements with collective management organizations in other countries and receive royalties directly from them, the money owed by PRS on international collections is owed primarily to songwriters. Therefore, PRS paying out black box royalties to publishers means they get a larger share than what they’re owed, Rowntree’s lawyers argued.
“In other words, Black Box royalties are transferred from PRS writer members and given to PRS publisher members who have no right to those royalties,” stated a website set up by Rowntree.
“It has always been our position that these allegations were based on a fundamental misrepresentation of our policies and operations, which has been fully vindicated in this judgment.”
PRS for Music
According to information provided to the tribunal, about 7.5% of works in PRS’ purview are black box. This can happen when some or all of the rightsholders aren’t properly registered with PRS, or when a work of music can’t be properly identified, or when a rightsholder’s bank information isn’t available and/or correct.
PRS said it “welcomed” the tribunal’s decision to reject the class action suit.
“It has always been our position that these allegations were based on a fundamental misrepresentation of our policies and operations, which has been fully vindicated in this judgment,” PRS said in a statement.
“The Tribunal clearly identified that the class was effectively suing itself. It also noted that it was not clear how PRS would be able to pay any costs and damages other than by diverting royalties away from its members, including funds that would end up going to pay legal fees and the litigation funder.”
PRS for Music also stressed that songwriter members’ concerns can be addressed through its Members’ Council. In its judgment, the tribunal noted that resolving the issue through the Members’ Council, or through PRS’ Board or its Distribution Committee “has not been attempted.”Music Business Worldwide
