Throughout the current UK parliamentary inquiry into the economics of music streaming, and indeed, throughout the history of streaming itself, Music Ally has worked hard to cover the full range of views in the debates about how streaming pays off for musicians.
That’s why we’ve reported at length on the key sessions at the inquiry, taking in artists, major labels, independent labels, industry bodies and streaming services. It’s also why, back in May 2020, we invited Tom Gray, a key figure in the Broken Record campaign that would ultimately lead to the inquiry, onto our Music Ally TV Show to set out his views.
It’s also the reason why we have now extended a similar invitation to Geoff Taylor, chief executive of the BPI, Brit Awards and Mercury Prize. Like Gray, he gave evidence during the inquiry, speaking on behalf of the BPI’s major and independent label membership.
You can watch the full episode – it’s embedded below – but in keeping with our past coverage, we’ve also turned it into a written report, which follows.
The interview kicked off with Taylor expressing broad support for the inquiry’s impact – “a positive opportunity for some of these much-debated issues to get aired, and to hear viewpoints from right across the industry” – but also expressing his fear that the recommendations of the Digital, Culture, Media and Sport (DCMS) committee which is holding it may include “policy interventions that won’t work, or could be counterintuitive or do more harm than good”.
Prime among those is equitable remuneration (ER), which has been one of the main policy aims of the Broken Record campaign. To recap: ER is the system already used in the UK for recorded music royalties from radio and TV usage, administered by collecting society PPL, which splits them 50/50 between artists and labels.
Broken Record is not calling for ER to be applied to streaming in its entirety, but rather to its most radio-like, lean-back elements: for example when what’s playing is being decided by a recommendation algorithm rather than by the listener. Labels aren’t keen at all on this.
“The suggestion that equitable remuneration might be the solution really doesn’t work for us,” said Taylor. “We think it’s not going to work as a solution even for those artists who think it might, but that it also would have substantial, negative effects on the long-term competitiveness of the UK business. We are quite concerned about that.”
Taylor’s argument against ER partly reiterates some of the talking points from the inquiry. For example, whether even lean-back streams are as radio-like as has been suggested.
“When you’re on a streaming service, it’s not like listening to the radio, because you the consumer choose exactly what song you want to listen to, and when you want to listen to it, in the same way as you chose what CD you wanted to buy,” he said.
“Whereas on the radio, someone else is choosing those songs for you. I know people will often say well, there are parts of the service like Spotify Radio that should be considered as radio. That doesn’t really look at the whole service, because the difference – the fundamental difference – between Spotify Radio and traditional radio is that on Spotify Radio, at any point, you are in control.”
“You still have 60 million tracks you can choose from. You can skip at any time, you can rewind, you can pause. You can see the next tracks that are coming. You are in total control – interactive control – of that experience. You might choose to lean back, but you’re paying a subscription that gives you the option at any point to consume fully on demand.”
Will the committee agree? Music Ally’s sense is that the MPs are looking more favourably on the Broken Record campaign’s arguments for ER rather than on labels’ arguments against it. The risk for labels is that their opposition to the model is seen as pure self-interest, because it would reduce their share of streaming royalties.
‘Exclusive rights give you the power in a negotiation to say no’
That’s why Taylor wanted to talk about the wider potential impact of introducing ER for streaming royalties.
“We think it would have really serious adverse consequences for the whole music ecosystem, that would be very significant and very negative. Really what it would deliver is a win – a massive win, and a windfall – to the platforms, at the cost of everyone in the music community,” he said.
“What you look at when you see equitable remuneration systems anywhere in the world, what they’re characterised by is it’s a different kind of right. You’ve got exclusive rights over here, and you’ve got equitable remuneration rights over there. And exclusive rights give you the power in a negotiation to say ‘No, I’m walking away from this deal and you can’t have my music’.”
“Once you’re in the world of an equitable remuneration right, you’ve lost that power. And the user – the platform – can use your music and you can’t say no, and all you can do is argue about the price. And that makes a fundamental difference to the deals that get done… Typically they deliver only a few percent of revenues as the royalty.”
Taylor pointed to the £85m of broadcast revenues paid to artists and labels collectively in the UK, compared to more than £700m a year generated by streaming.
“Why would we want to swap the direct licensing model that delivers [more than] seven times as much, why would we want to change that to an equitable remuneration model that everywhere we see it in the world delivers very small amounts of revenue?” he said.
“What it [ER] would do is massively reduce the pool of money available to the music industry. Yes, that would then be split through the collecting society 50/50, but we’re absolutely convinced that our artists would be worse off. And not only that. Labels would be left with a tiny fraction of the current amount that they have to invest into talent.”
This is a key argument for labels, which they clearly hope will hit home with the DCMS committee, but also with the British government – which after all will have a key role in implementing (or not) the committee’s recommendations.
Exports are a big part of the government as it scrabbles to make the UK’s exit from the European Union – Brexit – a success. The UK’s music industry already punches well above its weight globally, so it is no surprise to see that being brought in to the debate about ER.
“You’d have only a much smaller amount to sign new artists, a much smaller amount to market those artists. It would make the UK extremely uncompetitive if this [ER] were done in the UK and not elsewhere. So talent wouldn’t want to sign here,” claimed Taylor.
“It truly would be the death knell of the success of the British music industry, and we can’t afford to do that with a streaming model which every year is delivering growth for artists and for labels.”
‘The current system is delivering a lot of benefits’
Clearly the pro-ER campaigners would not agree with the ‘death knell’ aspect. We put to Taylor the recent suggestion by Tom Gray in a guest column for MBW that ER could be applied as a “halfway house” system following the model used for music publishing, where royalties are split between performance and mechanical rights.
Gray suggested that such a hybrid system would ensure label revenues (and thus investment) do not take a drastic hit, while also addressing fears about losing negotiating leverage with DSPs. Couldn’t that kind of solution work for everyone?
“Trying to take something, an old concept and conceptual framework from the publishing world, of mechanical rights and performing rights and splitting them, to me it doesn’t make any sense trying to apply it to the streaming world on the side of artists and labels,” said Taylor.
“The current system is delivering a lot of benefits. We’re seeing that income is rising every year, substantially. We’ve seen seven, eight, ten percent growth over the last few years… Every year more artists benefiting. There are more artists earning a good income from streaming than has been the case for any format before it.”
The BPI is marshalling data in support of this argument, revealing that around 1,800 British artists are currently generating more than 10m streams a year each, compared to around 1,000 who were selling 10,000 records a year back in 2007.
“I don’t see that bringing in the equitable remuneration model, even in part, is part of the solution. We have a model which is not only ensuring that more and more artists are succeeding, but is generating record levels of investment into A&R. £250m a year being invested into new music by labels. £150m a year being invested into marketing,” he said.
“And the UK is doing really well globally. One in 10 streams around the world is coming from a British artist, so we’re seeing success, and we’re seeing that success growing at a macro level. But that doesn’t mean we don’t understand the concerns of some artists who feel they’re not benefiting from that success, because in relative terms, they may not be being streamed a large amount.”
‘There are 300 British artists getting over 100m streams a year’
The DCMS committee has heard from an impressive range of people during its inquiry, but if there’s one criticism, it’s that its sessions only heard from artists who are unhappy with streaming, and not from those who feel more positively about it.
Positive testimonies wouldn’t (and shouldn’t) have cancelled out the criticism, but they would have shed more light on what kinds of artists are doing well, and why – which may be helpful for understanding how the model might be improved for artists who are struggling.
One of those artists is Nadine Shah, whose testimony in the inquiry’s first day of sessions was referenced throughout the subsequent hearings. It cut to the heart of the debate: a critically acclaimed, awards-nominated artist who’s worried about surviving in the streaming era, let alone thriving.
It was brave and important testimony, and it lodged firmly in the minds of committee members. It also presents a quandary for labels and industry bodies like the BPI, who want to argue that Shah’s situation does not represent that of all artists, without seeming to attack her personally, or ignore her concerns.
Taylor stressed that he is a fan of Shah’s music, and was “cheering her on” when she was nominated for the Mercury Prize in 2018. Here’s how he responded to her testimony, and its impact on the inquiry, when we asked about it.
“There are lots of artists who have different profiles. Some artists have a really strong streaming fanbase, others will have a great live following and sell some physical but not be as popular on streaming. That is just the reality of the market,” he said.
“Streaming has also brought a lot more artists into play. If you look at the number of artists who get 100,000 streams a year, that’s about 300,000 artists now in the UK. If you compare that to the number of artists who used to sell 100 CDs a year, it was about one sixth as many. So we’ve seen a sixfold increase in the number of artists that are in the market.”
“So you do see some artists for whom streaming is only part of their music career. I guess Nadine, potentially, is one of those artists, with critical acclaim, a good live following, but actually I think her streaming numbers are something like one to two million, that kind of range, and the artists who are achieving lots of success are getting tens or hundreds of millions,” continued Taylor.
“There are 300 British artists getting over 100m streams a year. For an artist who is streaming 1-2m streams a year on streaming services, that’s like selling 1,500 CDs. At no stage of our industry would that really have earned you enough money on its own to be a living.”
‘There is loads of positive news out there about streaming’
Note the ‘on its own’ there. The BPI’s argument is that artists like Shah will sustain their careers through a combination of income streams: concerts and festivals as they return; merchandise; physical sales; TV and radio income; brand partnerships AND streaming, with the latter driving some of those other opportunities.
This is another key point of contention where the DCMS committee will have to decide which way to lean, since the Broken Record campaign has argued that the financial struggles of Nadine Shah and artists like her cannot simply be put down to Covid-19 and the live music shutdown.
Taylor reiterated the BPI’s viewpoint. “I think we feel that perhaps the inquiry got off to a start from a perspective which wasn’t really representative of the market as it now is, with hundreds or thousands of artists getting tens or hundreds of millions of streams, there is loads of positive news out there about streaming,” he said.
“But of course, there will be some artists for whom streaming is a much smaller component of what they do, and who may feel that it’s not working for them. That’s always been the case: that there are artists who aren’t necessarily at the top of the market.”
“If you’re streaming one to two million streams a year, you’re about six thousandth on the list of most-streamed artists in the UK. I think it’s perhaps unrealistic to expect that streaming on its own is going to deliver a living at that level of popularity.”
That does still leave a question about how we ensure that talented artists don’t fall by the wayside simply because their streaming numbers aren’t in the tens or hundreds of millions.
The BPI has set out its desired policy measures in its evidence to the inquiry, from reforming the safe harbour system that it believes gives YouTube an unfair advantage over non-UGC streaming services; cracking down even harder on piracy sites; investing in music exports; and prioritising the safe reopening of venues, and a reinsurance scheme to help promoters go ahead with concerts and festivals this year.
‘Our view would be: we should look at it [user-centric] in more detail’
User-centric payouts, where the royalties from each streaming subscriber are divided solely between the music they listen to, are not on that list, although they have been mooted as a positive step forward by campaigners. In the final DSPs session, representatives from Spotify, Apple Music and Amazon Music also indicated a willingness to explore the idea.
During this interview, Taylor indicated that the BPI is similarly open to user-centric.
“It’s very interesting. Certainly to some people intuitively it just feels fairer. I’ve got some questions about it. We don’t really understand properly yet what its effects would be,” he said. For example, he noted that it might have a positive effect for genres like classical and folk, but a less positive one for genres like grime and hip-hop.
“That’s not necessarily a good thing: we’d have to weigh all those different impacts, which I don’t think we properly understand,” he said.
“Also if you’re a record label, you don’t even know between the different artists on your roster who it’s going to help, who it’s going to hurt, and you don’t know how much it’s going to help those who may benefit: whether it’s going to be just a few pounds a year or something significant.”
Taylor also raised the potential administration costs of user-centric, but added that this should not stop exploration of the model.
“Our view would be: we should look at it in more detail. I think BPI would be absolutely open to getting involved in doing that,” he said. “It would have some kind of redistributive effects. If that can be positive, then great. I think we probably just don’t quite understand it enough. What we haven’t been able to understand is the costs of putting it in place versus the benefits.”
“I think there is some complexity to putting in place either the systems to do it, or frankly a detailed study. You’d have to have quite a lot of partners willing to join in. But I think we’d absolutely be open minded to it. I think a study would be the right next move, so that we can understand it better.”
‘It’s never been more competitive than it is right now’
Before the interview closed, we raised another recurring theme of the inquiry: label deals. The contracts signed between artists and labels, both in the past and now.
It’s actually two themes really. The inquiry has seen campaigners criticise deals signed in the pre-streaming era that, because those artists have not recouped their advances – and recoupment is an infamously wiggly can of worms in the music industry – mean they are not earning from streaming now.
Meanwhile, labels and the BPI have focused on the positive aspects of the modern dealmaking environment: that artists have more options to get their music out (major label, independent label or distributor) AND more options when going the label route (standard deals, rev-shares, label services agreements etc).
Taylor reiterated those arguments. “It’s never been more competitive than it is right now, which is good news for artists and managers. You have the full choice. If you want a big advance and lots of investment, you can do a traditional-style deal with those elements to it, and maybe get a royalty rate that’s twentysomething percent,” he said.
“Or you can do a JV or profit-share deal, 50/50… or you can do a label services deal and maybe keep 70% of the money, or you can do a distribution deal and keep 80% of the money, or you can be your own record label, self-release, and keep 100% of the money. And managers are aware of that, and they shop round different record labels and look at the different options.”
“I don’t really think anyone should complain, really, about the operation of the current streaming market [in terms of competitiveness] because artists have every choice. If they want to distribute themselves and keep 100% of the money, and employ a team to market themselves and pay for their own recordings etc, that option’s there. AJ Tracey’s done it, other artists are doing it. I think that competition is a good thing for the business.”
When it comes to bad legacy deals, the BPI’s argument is that sorting them out should be a matter for individual labels rather than for politicians
“My view on that is they are, and should be, individually renegotiated. Managers generally are pretty adept at renegotiating whenever they can. That probably is the right way of dealing with these things, because every deal is different,” he said.
In the indies session at the inquiry, Beggars Group general counsel Rupert Skellett explained that the company wipes unrecouped balances for artists after 15 years, and operates a minimum digital royalty rate of 25%. He said that when founder Martin Mills had tried to persuade major labels to follow suit, they had declined.
“The main point is that if an artist is unrecouped, that essentially means that at that point in time, they haven’t sold or been consumed enough that they would have earned that amount of money under their contract had they not been paid in advance,” was Taylor’s response to that.
“If you take an approach to write off unrecouped balances at a certain arbitrary point, you are saying that there will be more cases in which a project will be lossmaking for the label. It will be harder for them to recoup their investment, because you’ll have written off the unrecouped balance, and at that point they’ll be sharing royalties with the artist, and it will take them longer to get back to breakeven.”
However, he added that he welcomes labels looking at this issue individually “and seeing what they can do”, noting that it could even be a competitive advantage if it leads to more artists wanting to sign with them as a result.
“Also, what I am hearing all the time from labels is that more and more artists are recouping, that they never thought would recoup, because of streaming. All these catalogues that were pretty dormant are suddenly enjoying some success from streaming, and artists are starting to recoup. So it’s also a problem that starts taking care of itself, in a sense.”
‘I regret that some of the debate has seemed to get so personalised’
The industry is now awaiting the committee’s report and its recommendations, to see which way it will lean on these various arguments and policy demands.
“I do hope that the committee will absorb the points we’ve been making about all the positive growth there is in the streaming business, and value that growth, and value the trajectory we’re on, and see that that trajectory will deliver for more and more artists over time, if we can keep it up,” said Taylor.
“Our hope is that they’re thoughtful – I’m sure they will be – in their policy recommendations, and not do things which will make the UK less competitive, or undermine investment by labels, which is really the engine of the UK music market’s success.”
“Labels partnering with artists is where it’s at, and we need to keep that environment dynamic, competitive in the UK. We shouldn’t over-regulate it or ossify it or make it too centralised and bureaucratic. What you want is lots and lots of competition between lots of different labels to sign the biggest talent, lots of competition between labels to sign the best deals with DSPs, and get one over on each other in those deals. Because more competition will ultimately lead to more investment, more choice for consumers, and more options for artists.”
Our final question was about the tone of the debate about streaming economics, particularly when it spills over into social media. We’ve seen some vicious spats on Twitter during the inquiry, although admittedly that’s a platform where vicious spats seem increasingly to be a feature rather than a bug.
As the dust settles from the inquiry, is there room for calmer, constructive conversations and even compromise? Sitting down together in a room may be difficult at the moment, but when that’s safer, is there scope for the various entities involved in the debate – from major labels and their representative body through to the artist rights campaigners – to come together and chart a positive path forward?
“I think some calm would be a very good thing. Personally I regret that some of the debate has seemed to get so personalised. I think there has been a lot of demonisation. I know a lot of people who work in record labels, and they are all people who are passionate in their love of music, and only want artists to succeed,” said Taylor.
“When you hear representatives of lobbying groups suggesting that the only people who make money from streaming are people at record companies, things like that. Firstly, it’s massively untrue. Secondly, it’s really unhelpful, because it’s really misleading.”
“As we’ve said during this interview, there are lots of artists who are doing well from streaming. That doesn’t mean they all are, and we recognise that, and we recognise that streaming is a challenging environment for lots of artists, and we all want it to generate more value.”
“But more constructive conversations, as you’re suggesting, in a calmer way, would be something that I would absolutely welcome. I think unfortunately certain individuals have seen this as an opportunity to really go to town, and to attack hard, and I think they believe that’s the best way to effect change,” he continued.
“I hope that if change comes, that it will be done in a way of partnership, and constructively, and by the industry together. And yeah, dialogue would be the first step towards that. Certainly the BPI is always open to such conversations.”
First, disclosure! Music Ally has a commercial relationship with the BPI: we work with the body on some of its insight session events. That’s not a factor in our decision to run this interview, nor does it affect our wider coverage of streaming economics. Throughout the partnership we have reported on campaigns like Broken Record and its criticisms of labels as usual. You can read more on our disclosures and partnerships here.
Second, further reading! Below you can find links to our previous coverage of the UK streaming inquiry so far:
Equitable remuneration takes centre stage at UK streaming economics inquiry
Nile Rodgers on streaming: ‘We must have transparency’
Major labels gave evidence to the UK’s music streaming economics inquiry… so what did we learn?
UK’s music streaming economics inquiry publishes written evidence
Independents day at the UK’s music streaming inquiry
BPI and MPA have their say at UK’s music streaming inquiry
‘The song value has been suppressed… because of the industry mechanics’
YouTube and SoundCloud testify at UK’s streaming economics inquiry
Spotify, Apple and Amazon at the UK streaming economics inquiry
Major labels talk user-centric payouts and equitable remuneration
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