In a move that is of significance for online music, the British music rights body has significantly reduced the royalty rate to be paid for streaming music. Under the new pricing plan, digital music sites will have to pay 0.085p for each track streamed, down from the previous rate of 0.22p. PRS, which negotiates song and lyrics licence fees for the public performance of music, has agreements with radio stations, television broadcasters and online music channels in the UK. It said that the new plan would “enable the digital market to grow”. There is a feeling that the cut may entice YouTube and popular Internet radio service Pandora back to the UK market, as they had blocked large catalogues of music when PRS started re-negotiating.

Andrew Shaw, managing director of broadcast and online at PRS for Music, said: “The Copyright Tribunal established the principle of a per-stream minimum to protect creators; maintaining this principle will ensure that writers, composers and music publishers continue to be rewarded every time their music is enjoyed. As new entrants join the market and existing providers expand, music creators will reap the rewards by sharing in the success that their talent is generating. This is a good deal for music creators and for music lovers.”

YouTube, which is owned by Google, had said that PRS demanded a “prohibitive” increase in licensing fees that would mean it would lose significant amounts of money with every playback. This is perhaps something that should have been foreseen in the company’s business plan, rather than forcing writers to reduce their income.

The rates for streaming services come into effect on July 1 and will apply for 3 years.