If you had the metaphorical (or, indeed, literal) popcorn out on Tuesday for the latest sessions in the UK parliamentary inquiry into the economics of music streaming… well, perhaps grab a few more bags now and settle in for the day.
The committee behind the inquiry has just published all the written evidence submitted by musicians, industry bodies and other interested parties. You can browse through it here.
We’re going to be rooting through the submissions and drawing out the most interesting arguments made, and will be updating this post with our findings.
Label body the BPI‘s submission argues that “the return to revenue growth [of the recorded music industry] is directly benefiting artists” in terms of investment in A&R and marketing, as well as royalty payments that have “increased significantly”. It directs the committee’s attention towards piracy sites, and also argues that “compared to premium subscription, advertising-funded and user upload platforms seriously undervalue the music content on their platforms.”
Global label body the IFPI‘s submission treads over similar ground, arguing that “Creating artificial barriers or red tape that would make the UK music industry less competitive, would hurt the entire UK music sector” while claiming that “digital growth has benefited all participants in the value chain”. It, too, presses for the government to focus its attention on tackling piracy and safe harbours for UGC platforms.
The official submission from the Broken Record campaign, written by founder Tom Gray, sets out its key demand for equitable remuneration where streams are being delivered more like radio – “so that artists can earn from On Demand streaming in the same way they have long earned from radio and TV transmissions”. It suggests that this right be administered by collecting society PPL. “We have an opportunity, in strengthening the rights of our creators, to rebalance the industry, invest in our talent and keep income inside the UK.”
PRS for Music‘s submission also focuses on these platforms as a “dominant force” in the market, building huge audiences by offering free content – a model that’s possible “because they often pay little or nothing to the creators and producers of that content”. But it also goes in on all the big music services. “The inequalities in the music streaming market are harming competition and innovation, ultimately to the detriment of users. The market is dominated by a few massive entities that have significant control of a once dynamic marketplace. Many major music services, both user upload and subscription, are owned by large technology companies that have less incentive in optimising the value of music, for themselves or the industry, as music services are a secondary function intended to keep their consumers within the vertical business model.”
The Music Publishers Association‘s submission asks the government to do more to help tackle piracy: including cracking down on the major app stores if they are found to be distributing apps that enable it. The MPA also warns the government off interfering in “freely-negotiated contractual arrangements between songwriters/composers and music publishers”.
Indie body AIM‘s submission offers a similar warning. “As a community of entrepreneurs, AIM’s Members express strong reticence to unnecessary and costly regulation of the music market other than where there is clear evidence of competition issues or other market failure,” it argues. “Policy that might intervene in the commercial negotiations risks destabilising a market which has become established after some decades of disruption and at a time when negotiating disparity between partners is decreasing and access to information for all participants is increasing.”
A joint submission from FAC, The Ivors Academy, MMF, MPG and the MU under the umbrella of the UK Council of Music Makers offers five “fundamental values” for the streaming market: that it should “value the songwriter and performer contributions to streaming more highly” and “recognise streaming is not a sale”; that it should “check the dominance of major music corporations on the streaming market across marketing, licensing and distribution of streaming royalties”; that there should be oversight of streaming services “to ensure algorithms are not biased, and there is equal access to the streaming market for all artists, songwriters and performers”; and that labels and publishers should be encouraged to “adopt progressive policies that write-off old contracts to pay streaming royalties and promote fairer deals between artists and labels”.
DiMA, the representative body for the streaming services, has a submission too. It punts the royalties ball firmly back into the court of rightsholders: “Streaming services have no influence over the terms agreed between rightsholders and creators, including royalty rates. In fact, once streaming services have paid the rightsholders, they have very little ability to see who pays who, and do not know how much ultimately ends up in artists’ or songwriters’ hands.”
The submission from the BBC includes a spicy section on competition between radio and streaming. “It’s important to ensure that the powerful position of music streamers – especially those with an established platform advantage – is not used to reduce access to other forms of audio such as live radio, radio on-demand and podcasts, all of which audiences expect to be able to access easily and for free. In particular, we want to be sure that music streamers do not use their position to undermine the prominence of live radio.”
YouTube‘s submission, unsurprisingly, makes its case for UGC platforms as a power for good in the music industry, including an updated payouts figure. “Globally, we’ve paid out over USD$12B to the music industry from our advertising and subscription businesses as of January 2020… record labels agree it is possible we will become the music industry’s number one source of revenue by 2025.” There is also a long defence of Content ID: “not just an anti-piracy solution, but also a growing revenue-generation tool for creators”. YouTube also doesn’t want the British government to modify safe harbour legislation “until a full economic impact assessment can be made of the impact of Article 17 in the EU”, and wants the committee to prod the music industry to develop a “comprehensive musical works and sound recording ownership database”.
Hipgnosis’ main suggestion was underlined in its submission:“Hipgnosis believes the focus of this inquiry should be on how the 70% of revenue that is sent to “Rights Owners” and where the money goes once they are paid by the streaming services.” It also calculated that a label’s cut would drop from 38.5% to 17.5%. “Moving to a broadcast rate for passive listening would significantly increase the proportion of the royalties paid to songwriters (11.75 % to 29.75%), and incrementally increase those paid to artists (16.5% to 17.5%) with the difference taken out of the record label’s pocket.”
BMG’s submission addresses “the elephant in the room” –”A revenue split which awards the recording four times as much money as the song underlying the recording looks anachronistic now record labels no longer have the costs which initially justified their greater share.” BMG goes on to propose a new system, which it believes will “encounter significant push-back from the traditional music industry,“ due to the “wholesale changes to working practices, improvements in efficiency and a more robust approach to overhead” required: “The only realistic way for artists to increase their income from streaming is for them to receive a higher share of the revenue generated by their recordings. “The only realistic way for songwriters to increase their income from streaming is for them to receive a greater share of the total pot of money paid by streaming services for the music they use.”
The Ivors Academy‘s submission also focuses on the songwriter splits (understandably, since those are its members). “Creators face a lack of transparency, lack of trust, royalty distortions and inefficiency,” it argues, before making four recommendations for the government. It should regulate “major music intermediaries” like it regulates collecting societies; it should implement copyright reform “based on the principles of liability of online platforms and provisions around greater transparency, improved contract terms and fairer pay for writers and performers”; it should “set a timeframe for implementation of the reform of Collective Rights Management systems and the implementation of a Minimum Viable Data Standard for music recordings”; and it should commission research into creators’ earnings.
Beggars Group‘s submission has some interesting thoughts on streaming algorithms. “The algorithm is now in charge, it has largely taken the place of charts, chart shows and even reviews,” it argues. “Spotify in particular is very focused on utilising algorithms to deliver what they think the user will listen to. Spotify resists attempts for rights owners to promote their own recordings via third-party owned playlists on the platform. The whole ecosystem is very much Spotify’s USP and they resist any non-Spotify offering. There is a clear policy to overlook albums and concentrate on individual tracks – for example on the new release page on Spotify there is no distinction between Eps, singles and albums.” It also worries that Spotify’s move to offer promotional plays in return for discounted rates may mean that. “the service increasingly chooses to push music according to how much it costs them”.
The Music Managers Forum and Featured Artists Coalition were more specific in their accusations of an absence of transparency, saying that, “the streaming market has become less transparent as it has diversified… A particular problem is the lack of transparency around advances and lump sum payments from streaming platforms (such as Spotify or Apple) or social media services that use music (such as Facebook or TikTok).” They also offer specific solutions to the lack of transparency at deal-level, which should, they say, be codified into copyright law: “An artist’s accountant should, on request but subject to NDA, have sight of specific deal terms where that information is required to properly audit an artist’s royalties.”
Former Spotify director of economics Will Page made a submission that drills down into one of the key challenges of the streaming era. “There is more money available but also many more mouths to feed… In 1984 (the earliest available data), the UK music industry released just 5,000 singles and 6,000 albums in one calendar year. By 2015, this had increased to a total of 60,000 albums per year… Since 2009, PRSforMusic has seen membership grow from 65,000 songwriters to 140,000 (up 145%) and PPL, which represents artists and recorded rights holders, has seen membership grow from 47,000 performers to 115,000 (up 115%).”
Madness (yes, with the Baggy Trousers) submitted a call for equitable remuneration to be applied to streaming. “It is our collective view that we are strong advocates of the application of Equitable Remuneration for the Recording Artist. We are aware of the active / “lean in” vs passive / “lean back” model. We would like to request that these two elements be officially investigated by the committee.”
Additional digging for this article by Joe Sparrow.
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Thanks for the analysis.
Agreed, thanks for this helpful summary. Even though I did listen to the whole hearing, it was really useful to go back through each point and catch some important statements I’d missed etc. I feel the issue of the ‘quality of ownership data’ is central to this, and the idea of a ‘minimum viable data standard’ is what’s needed to flush out issues of unallocated/misallocated royalties. There needs to be more innovation in this area of centralising rightsholder information, and creators also need to sharpen their own admin skills too, making sure the correct ownership details and codes are embedded in digital files they send out.
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