'The song value has been suppressed... because of the industry mechanics'

Yesterday’s second session at the UK’s parliamentary inquiry into the economics of music streaming was another double-header, featuring representatives of musicians.

Graham Davies is chief executive of songwriters body the Ivors Academy, while Horace Trubridge is general secretary of the Musicians’ Union (and a founder member of 1970s band Darts).

The panel of MPs questioning them quickly zeroed in on the question of streaming royalty splits between publishing and recordings – “one of the central issues for us… because so little of that is actually making its way through to our members,” as Davies put it.

There was an important contrast to the day’s previous session, in which Music Publishers Association chair Roberto Neri seemed to be saying that he’d like publishing’s 15% share of streaming royalties to grow at the expense of the DSPs’ 30% cut, rather than the labels’ 55% slice of the pie.

Davies took the opposite view, defending the investments being made by the streaming services – “they have taken on a lot of the marketing and promotion activities that once were the domain of the record labels” – and parrying a question about their 30% cut.

“I think that for the Ivors Academy, a lot of the attention is put onto the [other] 70%, because the song value should be higher within the 70%,” he said. “The song value has been suppressed, and we would argue that is because of the industry mechanics: in that it is in the interests of the record labels to do so.”

This comes back to a recurring theme in the inquiry: the question of whether recordings getting a much bigger share of streaming royalties than the underlying songs/compositions is driven by the interests of the three major label groups – who keep a bigger share of royalties for recordings than they do for publishing.

“Should the industry be pushing to get more out of the overall take from the subscriber and reduce down that 30% take of the DSPs? Well sure, of course. We’re representing songwriters and composers. Anything that gets more money into our members’ pockets, we would advocate for,” said Davies.

“But I’m trying to explain that for us, whatever money comes in to the industry, if it isn’t going to go into creators pockets, what would be the point of us advocating for more money if it’s all going to go into one place?”

He was backed up by Trubridge, who said he was unfazed by streaming services keeping 30% of their advertising and subscription revenues, and compared it to the share taken by physical music retailers back in the day.

“I don’t think the streaming platform taking 30% should really be the focus of too much alarm. It’s far more about the money that goes to the labels… Is the performance so much more valuable than the song? I’m not quite sure that it is,” he said.

Trubridge gave short shrift to the labels’ view that streams should be treated like sales – “it’s not a sale, it never was a sale: it’s a communication to the public. It’s like modern radio basically” – before mirroring Davies’ view with his thoughts on YouTube and the ‘value gap’.

“We would like to see YouTube paying what the other platforms pay. We’re supporting the rights owners in that lobbying to get the safe harbour provisions changed, and the value gap closed, but it’s kind of difficult to give 100% support when we know that money, most of it, will be going to the rights owners and not to artists and writers,” he said.

“We would much prefer the record labels to turn round to us, and say ‘okay, support us in closing the value gap, and we will make sure that we give you a greater share of what we get’. That’s what we want to hear, and then we could give wholehearted support to what they’re doing. It just feels like we’re saying ‘yeah, they should have an extra ten quid, so that our lot can get an extra 10p’”

Trubridge came back to the radio point, and the MU’s desire “to reclassify streaming as ‘communication to the public’ – to see it like you do radio. That way the money is split 50/50 between the record labels and the artists.”

In the day’s earlier session, BPI boss Geoff Taylor had been grilled about the industry body’s employment of a lobbying company around this inquiry.

Trubridge was asked the same question, and revealed that the MU had also hired a lobbying company (“for somewhere about the same as what Geoff is paying his lobbying firm I think” – i.e. £20k-£30k). However, he also offered a no-nonsense explanation of why.

“This [inquiry/topic] is so important to musicians, that if I didn’t hire a lobbying firm, and we don’t get any progress with this problem, then in years to come people will say ‘Why didn’t you do that? Why didn’t you try absolutely everything?’” he said.

Trubridge also drew on his history as a musician when asked about how streaming affects artists on ‘legacy’ contracts, signed well before Spotify was a glint in Daniel Ek’s eye.

“People are streaming stuff that they haven’t heard for years and years, and the record labels that own that catalogue now, very few of them have got details of all the musicians they should be paying royalties to,” he said, adding that even when they do, many of those artists are getting very low royalties, or – if they still haven’t recouped their original advances – nothing at all.”

The committee of MPs kept returning to the question of whether the division of streaming royalties between labels and publishers should be rebalanced, though, to enthusiasm from Davies and Trubridge, and more suggestions that the major publishers lack the clout within their parent organisations to drive change.

“It’s not hard to see why it’s unfair,” said Trubridge. “The publisher will pay out up to 80% of what they receive to the songwriter, whereas the record label will pay… maybe if you’re really lucky about 20%. Bearing in mind that the companies [major labels and publishers] are intertwined, there is a real interest in the shareholder side to keep the publishing payment down and the recording payment up.”

The session did touch on other topics. Trubridge expressed his fears that the dwindling provision of musical instrument training in schools is a big problem, because it’s disadvantaging children whose parents can’t afford to pay for it instead.

“And when you get to the point where you’ve got to struggle for a couple of years as a musician… you’re relying on Bank of Mum and Dad to get that foothold. So I think you’re getting a very narrow class of musicians coming in. That worries me an awful lot… there’s a lot less opportunity for people from deprived backgrounds.”

Both Davies and Trubridge acknowledged that YouTube and other streaming services are putting some money and effort into grassroots music programmes, but Davies warned that this activity “should be what people do as the right thing to do because they believe in the industry: not as an alternative for paying proper royalties – and that would go for all parties in the music industry”.

There was time for a bit of talk about the infamous ‘black boxes’ of unclaimed royalties within the streaming ecosystem: for example, money that hasn’t been paid out to publishers because recordings were uploaded to the DSPs without the necessary metadata.

Davies wants streaming services to crack down by refusing to make any tracks available that don’t have the publishing credits attached, and he suggested that there is “more than £100m of black box unattributable streaming royalties in the collecting society network” by the Ivors Academy’s estimation. “No one’s disproved that yet.”

This was the second session of three yesterday. The third would be the first to feature streaming services: YouTube, SoundCloud and Twitch. You can read our report on that here. In the meantime, read our report on the first session, featuring the BPI and MPA.