Analysis

Ministers give their views at the UK’s music streaming inquiry


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Yesterday saw the final hearing in the UK’s parliamentary inquiry into the economics of music streaming, but rather than music industry or tech executives being questioned, it was ministers and civil servants.

Caroline Dinenage MP, minister for digital and culture at the Department for Digital, Culture, Media and Sport (DCMS) and Amanda Solloway MP, minister for science, research and innovation at the Department for Business, Energy and Industrial Strategy (BEIS) were the ministers, and they were accompanied by Robert Specterman-Green, director of media and creative industries at the DCMS, and Tim Moss, chief executive of the Intellectual Property Office (IPO).

Here’s Music Ally’s topline takeaway from the session, and the inquiry more widely. The committee of MPs conducting the inquiry seem to be leaning towards the Broken Record campaign’s view of streaming: that most artists are struggling; that major labels are market-dominating villains; and that ‘equitable remuneration’ (and perhaps user-centric payouts) could be a good thing. Oh, and that YouTube is a wrong ‘un, and safe harbour needs to be reformed.

That’s our sense, anyway, with the obligatory caveat that this is a committee of MPs drawn from different parties who don’t necessarily all share the same views.

How about the ministers based on yesterday’s hearing? It’s not the same story.

If anything, they seemed much closer to the views evinced by the major labels and their representative body the BPI during the inquiry: that the market is competitive with more options for artists than ever before; that the biggest problem for artists is Covid-19’s live music shutdown rather than the streaming economy; and that current copyright definitions (the ‘sale or rental’ question that’s come up lots during the inquiry) are fit for purpose.

However, on the one thing Broken Record and major labels agree on – the YouTube / safe harbour issue – the ministers seemed distinctly lukewarm, as they wait to see how EU members implement its new copyright directive before deciding whether to work on similar legislation for the newly-Brexited UK.

In the early exchanges, Dinenage and Solloway’s views chimed exactly with those of the BPI: that streaming has helped reverse the recorded music industry’s decline, and that Covid-19 has highlighted “more than anything how much modern artists rely upon live performances now” for their income – in Dinenage’s words.

“It would occur to me that the loss we’re seeing in the music industry is from the live performances,” added Solloway, who later responded to a question about whether streaming provides an income for artists by saying “Well, I actually think it provides an opportunity of having an income”.

On competition, the ministers also batted back suggestions that the three global majors play an unhealthily dominant role in the industry, and thus the streaming ecosystem – again, matching the views of those labels and the BPI.

“There are many, many more routes to market for performers, for artists, than there ever used to be,” said Dinenage. “We know some really successful artists that are effectively their own record company.” She cited AJ Tracey, who was also mentioned by BPI boss Geoff Taylor in his recent Music Ally interview.

Whenever the idea of unfair competition or market domination came up, the ministers’ instinct was to reference the UK’s competition regulator the Competition and Markets Authority (CMA), with Dinenage stressing several times that the CMA is “operationally independent” – i.e. it’s up to that body whether it investigates major labels or streaming services, not up to politicians.

They were also keen not to pre-empt the inquiry’s own report on some of the potential changes to be made. For example, here’s Solloway’s response to a direct question about whether ‘equitable remuneration’ would be a good idea.

“I think it’s absolutely worthwhile looking at in this inquiry, and that’s why I welcome it so much. I think when you think about the way broadcasting works, and I understand that premise… so there’s something to be said about that, but I think there is also a discussion to be had, which is absolutely the discussion that you’re talking about, in terms of remuneration and are there other ways of looking at this?”

Strong Yes, Minister energy at this point.

The committee probed on the question of streaming as a sale or a rental, with Solloway expressing the view that “if we’re talking purely on Spotify, it is not buying: if I were buying a record I would retain it, so that is where the buying part is”.

However, IPO boss Moss expressed the same view as the labels and the BPI: that the “making available” right that applies to streaming remains fit for purpose, suggesting that “it was actually introduced to deal with things exactly like streaming… it’s an exclusive right for the rightsholder, and it is designed for the streaming environment”.

(A minor controversy here, since the relevant right was created a few years before music streaming emerged, so was actually designed for music downloads. Moss was later challenged on this, and accepted the point.)

This is all part of the debate about whether some streams – the most radio-like ones served up by playlists and algorithms – should be licensed more like radio with ER. Interestingly, Dinenage’s views were closer to the Broken Record campaign’s on that point.

“If you’re listening to playlists that are being suggested to you by algorithms, then there isn’t a great deal of difference from it being broadcast on a radio,” she said. That will be seized upon by pro-ER campaigners, although Specterman-Green quickly brought the conversation back to the ‘making available’ right, and his view that it remains fit for purpose in streaming.

There were more ministerial parries to follow. On whether labels’ share of the streaming pie is too large at the expense of publishers, Dinenage said “I don’t really think I’m qualified to be able to make that judgement… the music industry themselves are very divided on this question” and suggested that this was a matter for “the music industry sector to work more collaboratively together to come to a conclusion that suits everybody a little bit better”.

However, she was tempted into a further thought on ER, in response to a question about session musicians getting royalties from broadcasts but not from streams. “I wouldn’t want to comment myself on what is and isn’t fair,” she said, before commenting: “But it does seem there is a disparity, as you commented, between what happens on the radio and what happens on streaming”.

This session’s ‘chair aggro’ moment (see also: UMGs David Joseph trying not to talk about Spotify deal terms; YouTube’s Katherine Oyama trying to explain why there isn’t a single ‘per-stream’ rate) came when committee member Kevin Brennan MP grilled Moss about the IPO’s in-progress survey of musicians about their earnings.

There was bags of subtext here. Brennan asked whether the various music industry entities are contributing “hard data” to the study as they were expected to do. In other words: are labels and streaming services cooperating or not?

Moss didn’t want to answer. “The research is ongoing. We look forward to the results coming out in the summer,” he said. When pressed on whether the labels and DSPs have contributed data: “I do not have the detail around that because I’m not directly involved in that piece of research. It’s independent research, of which we are party to it, and I wouldn’t look at the details on that until the research is concluded.”

After more back and forth, we got the chair aggro moment, as the committee’s leader Julian Knight MP let rip.

“You’ve come in front of a parliamentary subcommittee to do with music streaming. What did you think we were going to ask you about? Did you think it was going to be watersports? This is something which is absolutely germane to your role, and you’ve come in front of us, frankly, and offered absolutely no details.”

Oof. And while Moss joined Joseph and Oyama in Knight’s hall of infamy, this exchange has brought the question out into the open of the IPO study, which labels and DSPs are cooperating with it, and (if not) why that is the case.

What else? There was more manna for the Broken Record campaign in Dinenage’s assertion that while the government doesn’t want to stick its nose into private deals between labels and DSPs: “We 100% recognise that artists and creators need to be fairly remunerated for the work that they do, and that’s never been more important than now, given the just extraordinary times that we’re living through.”

That doesn’t address the thorny question of what IS fair remuneration for musicians of course. But in the lobbying to come once the DCMS committee publishes its report and recommendations, the statement above by Dinenage will surely be key to the Broken Record arguments.

Onto safe harbour, though, which is where yesterday’s session made uneasy viewing for the artist campaigners and music rightsholders alike. It’s now clear that the UK government is going to watch how the EU states implement the new European Copyright Directive before embarking on any of its own copyright reform.

“We’ve got the opportunity to observe and monitor how that is done before we take any decisions about the future of our own copyright regime,” said Specterman-Green.

“There were mixed views on the copyright directive, because it was supported by some sections of the music industry, but in actual fact it was opposed by others,” said Dinenage. That remark won’t go down well within the industry at all: the lobbying for the directive was actually a notable point of unity for its various factions.

Solloway agreed with Dinenage, noting that the government will “have a look at what is happening in the EU and see where we find our situation, rather than making a decision at haste: we believe this will strengthen what we’re able to do”. Moss, meanwhile, claimed that “the directive was a real compromise around a number of issues, and there is a real opportunity now to look at what is really appropriate for the UK”.

Back to square one for the British music industry’s campaign to reform safe harbour and give (as rightsholders see it) YouTube far less leverage at the negotiating table? Perhaps. Later, Solloway and Dinenage both said they didn’t have enough data to draw conclusions on whether YouTube’s safe harbour harms the music industry.

However, Dinenage did know that “YouTube have invested very heavily” in copyright-detecting technology, and when asked about whether safe harbour gives YouTube an unfair advantage in licensing negotiations replied: “I don’t know. You’d have to ask YouTube what their attitude to this is.”

She did point out that the CMA is establishing a new digital markets unit to look at competition issues within the tech world, reminding the committee again that the regulator is “independently operational from government… whether they would have the opportunity to look at YouTube would obviously be a matter for them”.

(In another possibly significant moment, Dinenage was asked whether the CMA could investigate the major labels on competition issues. “I’m very happy for the CMA to have a look at this,” she said. Although in truth this was less an encouragement, and more just another way of expressing a hands-off attitude to the regulator’s decisions about what it does or does not investigate.)

On the core question of the inquiry: whether artists are sufficiently remunerated through streaming royalties, Dinenage was closer to the labels’ view: that Covid-19 and the live shutdown has had a big impact; that streaming successfully defeated piracy; and that the explosion in the amount of artists and music has inevitable winners and losers.

“Streaming has enabled more artists to become successful, but at the same time more unsuccessful,” she said. “We know that so many more unknown artists are able to get their music out there than they were under radio, for example, where they were relying on geniuses like John Peel to break into the music industry,” she said.

“Spotify say that they get 60,000 new tracks a day uploaded, so if you’re a new artist trying to break into the market, there are some real opportunities there. But equally, there are some established artists for whom actually their genre does not particularly lend itself to streaming as a way of digesting their music. It’s not so successful, and also the more artists that there are, they’re sharing a smaller piece of cake each.”

She came back to that point, suggesting that while genres like R&B, rap and bedroom pop work well on streaming, the likes of “folk, more indie music, the type of music on 6Music, obviously classical music” do not “and therefore it’s much, much harder for those artists”.

So, where does this final session of the inquiry leave us? It’s vital to understand the process from now on. The committee will now write its report and make its recommendations, and we would not be surprised to see it back the idea of equitable remuneration applying to some streams; to call for the kind of safe harbour reform that YouTube wouldn’t like; to back user-centric payouts or at least encourage a UK-focused study; and to throw its weight behind boosted funding for British music exports and perhaps even tax breaks for music companies.

But recommendations are not legislation, so whatever the committee suggests, we’ll then move into a whole new period of intense lobbying of ministers like Dinenage and Solloway, and their departments.

While a glib assessment might be that they’re currently closer to the BPI and major labels’ views on everything bar safe harbour, where they’re closer to YouTube’s, the Broken Record campaigners will surely be energised by the inquiry thus far, and ready to make a new push to win ministers round to their way of thinking.

In other words, it’s all still up in the air. But whatever is recommended and how (or whether) that ultimately becomes legislation isn’t the full story of this inquiry.

The sessions and written evidence have aired some very important dirty laundry; cleared up a few myths and – yes, this is trademark Music Ally tiptoing-along-the-fence optimism – opened some paths towards compromise, collaboration and meaningful improvements to the way streaming works for everyone.

Stuart Dredge

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