COMENTARIO Recurso Agua.

Publisher royalties are without doubt the main source of income for the Welsh language music industry. By comparison, the financial clout of CD sales remains small and will continue to diminish in the wake of the digital age. Changes in royalty payments will not only affect one or two record/publishing companies – it will also damage a number of ‘home made’ independent labels who rely on Radio Cymru airplay for financial support. Over the years, makeshift labels have mushroomed due to the financial incentive provided by royalty payments. Funding the recording and the release of a music product in future will become unviable. As pointed out in the survey, inevitably there will be major cuts in new releases resulting in a cultural and economic shrinkage of the Welsh music industry in general.

Establishing a new collection society would involve a major undertaking, bringing in specialism from a number of different areas. The financial investment required to establish a company of this kind is substantial, but a variety of grant sources available from the Welsh Assembly Government could ensure that the prospects of setting a society become realistic. The two main elements of the scheme – digital economy and intellectual property – both fit in line with WAG strategic investment, suggesting that it is a strong candidate for receiving funds.

The main element, which calls for both economic and intellectual investment, is a database system; this will form the cornerstone for the society’s activities. The society’s operations year-on-year will be greatly facilitated through and efficient web site and server.

The value and price of the product is also a key component. If a collection society is to sustain itself in the long term, it is essential that supply matches demand and that the product is accorded its true worth. The Welsh Composers’ Alliance could take advantage of the value this music possesses for the BBC (especially Radio Cymru) by setting up negotiations with them. There is clearly room to question whether the

current rate-per-minute on Radio Cymru of 49p fairly reflects the value of this music for composers and audiences alike. Our argument is that it does not do this, and that a rate of £4.71, which would take effect were Radio Cymru allowed onto the DAB (Digital Audio Band) network, would reflect the value of this music in a fairer way.

The study has also looked at practises in other countries, including Croatia and Estonia. If present Welsh PRS members decide that establishing a new collection society is the only credible way forward, it is likely that payments will be very small during initial years, as the new society will have to invest heavily in setting up and legal costs. Nevertheless, the Croatian model indicates that such investment will finally bear fruit – their payments presently exceed equivalent sums distributed by the PRS in Wales. The HDS in Croatia is therefore a fine example of a society that has evolved and extended its services in the area of copyright and royalties.

It has also been seen that IMRO in Ireland initiated devolved powers within this area, eventually breaking free of the PRS. Unlike the Irish situation, however, forming a Welsh collection society would involve a higher element of risk, as this would need to be formed ex nihilo.

One of the main strengths of this project is its innovative dimension, using cutting- edge technology and enabling creators to retain intellectual property within Wales. Jobs and skills will also be formed, eventually contributing to the economy. The company will become ambassadors for Wales in this area, and the Welsh Assembly Government should in principle be supportive of any scheme, which attempts to increase the profile of Wales on an international stage. Further research in this area would need to take into account of the following:

• An effective system for recording, processing and licensing works; • Pricing an IT system which would encompass the above areas;

• Create a structure which would balance the needs of both composers and music publishers/recording companies;

• Examine the costs of setting a company by outlining different economic models by assessing job prospects and requirements;

• Assessing the legal costs and prospects of receiving long term grant aid.

All the above would need to be examined in detail before an authoritative business model can be produced. Further research would provide present PRS members with a clearer choice of options and secure long-term development for the industry. Members have indicated in a targeted questionnaire that the cuts will result in the reduction of product in this area, resulting in a negative impact on the industry. By the end of 2010, distribution payments will have reached such a low point that the need to seek an alternative solution will have become imperative, and a new royalties collection society in Wales may well be the only remaining option.

The notion of setting up a new collection society is gathering momentum amongst present PRS members in Wales. A one-page questionnaire distributed to a large number of present Welsh-speaking members of the society in August this year returned an overwhelming level of support for the idea, as shown in Table 3.1.2.1 (below). 86% of the members responded that they had experienced a fall in PRS

payments for the July distribution (this figure is likely to be even greater for the October 2009 distribution).

Table 3.1.2.1 Fall in PRS payments?

Asked whether they were happy to continue as members of the PRS, given the fall in payments, only 35% stated their wish to do so. 50% declared that they were unhappy to remain with the PRS, as show in Table 3.2.1.2 (below).

Table 3.2.1.2 Continue membership of the PRS?

Of those who were asked whether they would consider joining a separate collection society, the response was equally overwhelming, with again 86% interested in the idea, as shown in Table 3.2.1.3 (below).75

75 _{More detailed statistics relating to this questionnaire is contained in Supplement 5} of the report.

While support is gathering for a new music collection society in Wales, there is also concern that such a venture may fail. The fear of failure presently outweighs the will to succeed, but a detailed and comprehensive business model in order to assess the feasibility and viability of establishing such a society may convince doubters that breaking away from the PRS is not only the only option left for Welsh composers and musicians, but it will also turn out to be the right choice.