The sudden fall in interest rates has forced the U.K.'s Mechanical Copyright Protection Society (MCPS) to implement a far-reaching review of operations in order to cut costs.

Speaking at the Music Publishers Association (MPA) annual general meeting (AGM) in London, PRS for Music chief executive Steve Porter revealed that what he dubbed the "interest rate meteor" was projected to result in £4 million ($5.6 million) shortfall in MCPS finances in 2010. MCPS, the subsidiary company of the MPA, is part of the PRS for Music collecting society brand.

Porter said that MCPS distributed income to publishers for 2008 was £184.3 million ($259.8 million), an increase of £8 million ($11.3 million) on the original budgeted figure, which he described as a "pretty strong performance." However, he predicted a 10-15% reduction in revenue from audio products in 2009.

But while overall revenues are being hit by falling CD sales and lower income from music in advertising, Porter said 80% of the decline can be blamed on interest rate cuts. And he said the problem is affecting collecting societies around the world.

In the U.K., interest rates were rapidly slashed from 5% to 0.5% in an effort to counter the effects of recession, but Porter says the resulting slump in interest earned on money the MCPS has deposited is causing serious problems.

"That is having a much bigger impact on the performance of MCPS than anything else," he told the audience at the June 25 AGM.

While the MCPS accounts were bolstered by £4 million ($5.6 million) in interest earnings in 2008, Porter said this would only account for £800,000 ($1.1 million) in 2010.

However, with measures including cost reductions and reorganization, Porter stressed that he is "confident that £4 million is simply a projection - it's not a case of where we're going to end up." MCPS aims to break even over the course of a year.

In conclusion, he commented: "I think it's a pretty positive message, albeit that the external market conditions are tough and getting tougher."

During questions, Ralph Peer, chairman and CEO of Peermusic, alluded to the issue of "copyright gridlock" raised by MPA chief executive Stephen Navin.

"If we can provide ease of licensing, we are actually providing better value and should actually increase our results," said Peer.

During the AGM, Nigel Elderton and Chris Butler were re-elected as chairman and deputy chairman respectively. They were first elected in 2008.

Elderton gave a robust speech, taking on ISPs who refuse to regulate their service for copyright infringement, criticising intellectual property minister David Lammy for comparing illegal downloading to stealing soap from hotel rooms, and lambasting digital start-ups who refuse to accept the existing system of licensing.

He said that "often these companies have left the market long before" rights holders and collecting societies have actually secured licenses, while praising the "shining examples" of Last.fm, Nokia, We7 and Spotify who have "good customer propositions" that remunerate rights holders.

Navin gave an entertaining speech that celebrated the 300th anniversary of the Statute of Anne, the first copyright law in England, and invoked the Gettysburg address. "As music publishers we are dedicated to the great task remaining before us that the value of music, of the people, by the people, for the people shall not perish from the earth," he told the audience.

The election of the pop publishers to the board resulted in the following five gaining a place: Simon Platz (Bucks Music Group), Stuart Hornall (Hornall Brothers Music), Rak Sanghvi (Sony/ATV Music Publishing), Crispin Evans (Cote Basque Music Publishing) and Nigel Elderton (Peermusic). Evans was newly elected, the others were re-elected.

The three classical publishers were all re-elected: John Minch (Boosey & Hawkes Music Publishers), Ben Newing (Universal Edition London) and Shirley Ranger (United Music Publishers).