Pubs, bars and clubs face 130% hike in music license

Pubs, bars, clubs and cafes that host live djs and discos may be slapped with a 130% hike in the license to pay music, in a move described as a “potentially devastating” blow that will cost the hospitality sector millions.

Is the party ending? Empty cocktail glasses on a countertop in a nightclub

The license hike comes as part of a new tariff being introduced for playing music in public introduced by the Phonographic Performance Limited (PPL), the music licensing company that collects royalties for around 100,000 performers, rights-holders and 10,000 record companies.

PPL has introduced a Specially Featured Entertainment (SFE) tariff for nightclubs, pubs and bars, restaurants and cafés and hotels that host djs and discos, that comes into effect on 1 July 2019. It following an 18 month consultation to update a 30-year-old tariff, which it claims will be fairer to licensed businesses as well as recording artists whose work is featured.

The new rules take into account the duration of the event and the size of the audience, so that the fee paid is in proportion of the number of people attending, with two new tariff bands introduced for smaller events (of up to 25 people and between 26-50 people).

The increase in the fee will be introduced gradually over the next five years, which it says will give licensed premises the opportunity to adapt, going from the current charge of 3.9p per person per hour to 4p per hour this year, before more than doubling to 9p per person per hour by 2023.

PPL Chief Executive Officer Peter Leathem said the new tariff had been set in consultation with licensees and would ensure a fairer system.

“Recorded music forms a very significant part of SFE events and we believe that the new SFE tariff delivers a fairer return for our members who create that music,” he said.

However, trade organisation UKHospitality warned it was a “potentially devastating… new tax” for the hard-pressed hospitality sector that would out even more pressure on the sector.

UKHospitality chief executive Kate Nicholls said: “The decision to introduce a new tax for music venues could be potentially devastating. This new tax will see venues hit with an average 130% increase which we estimate will cost the hospitality sector upwards of £49 million.”

“It is not just nightclubs and large venues that will be hit, either. Village pubs that host weekly discos will be strangled by the charge and there is every chance that such events, upon which many pubs might rely, will be forced out altogether.

“It is disappointing to see [PPL] ignore our warnings and push ahead with a hike.”

The British Beer & Pub Association (BBPA) also hit back at the new rates, calling it a ‘disappointing” outcome.

Brigid Simmonds, chief executive of the British Beer & Pub Association, said companies who had been paying SFE licences over the years had already been paying more than their fair share, as the existing tariff had consistently grown through the annual RPI inflation index.

She said the proposed price of the tariff was “disproportionate and unwarranted” and not sustainable.

“The night time economy is vital to the future of our high streets, but businesses that are crucial to that night time offer like pubs are already struggling, with on average three pubs a day closing their doors for good. This decision will be another big blow to hospitality businesses that are struggling to survive,” she said.

“We will consult with our members and the wider hospitality industry in more detail on these unreasonable increases. Copyright charges are established by law, but average increases of 130% that undermine the viability of pubs, clubs and the night time economy are not justifiable.”