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Online services have welcomed a new rate schedule that will cut the cost of music streams in the UK.

The PRS yesterday cut the cost of royalties owed for streaming a song from 0.22p to 0.085p. The headline rate rises to from 8 per cent to 10.5 per cent of revenue, supposing the company has any.

Steve Purdham, chief executive of the ad-supported jukebox We7, told us that he expected the 60 per cent cut by the PRS would shave 10 per cent from the cost of delivering music legally.

"This is the first true indication that the main barrier to legal music is the economic one. That's why Pandora and YouTube withdrew from the UK."

The PRS rate includes mechanical copyright royalty - because a stream is considered a copy. Payments to the performer or label take the overall rate to about a penny, he said. Pandora closed down UK streams early last year, while Google's YouTube went nuclear, and yanked its music videos in March.

The rates take effect on July 1 and don't apply to simulcasts, subscription services or download stores.

Neither Pandora nor Google have yet commented on the move. Not everyone was sympathetic to Pandora's pleas when it pulled out of the UK last year, but in January the popular on demand radio service introduced advertising - and a subscription rate of $35. ®

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