Copyright

It is a breach of copyright if you:

- copy a piece of work
- sell, rent or lend copies of a work to the public
- perform, show or play a work in public
- broadcast a work
- make an adaptation of a work

If it's for home use and you do not publish it anywhere public e.g. Youtube, you should be ok and dont need to pay.
 
Probably falls under 'copy of work' and/or 'adaptation of work'.

In reality common sense has to apply. If it's a local competition and the winning video is not going to be published in a public place or played repeatedly somewhere, then you can probably take the risk. If, however, by winning the competition organiser then has unlimited rights to use the video (as sometimes happens) then you and they could have a problem later if the Performing Right Society come across it.

http://www.mcps-prs-alliance.co.uk/Pages/default.aspx
 
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