As the culture select committee of the UK Parliament finishes off its report following that big old inquiry into the economics of streaming, 156 artists have put their name to a letter to Prime Minister ‘Boris’ Johnson which contains three key demands: the extension of performer equitable remuneration to the making available right, a competition investigation into the dominance of the major music companies, and a new regulator “to ensure the lawful and fair treatment of music-makers”.
The economics of streaming, of course, is a tricky business, and there are an assortment of issues with the current model, which made the recent Parliamentary inquiry into the digital music sector somewhat confusing to follow at times.
However, in the end, the main focus of that inquiry was the digital pie debate, which is to say how the monies handed over by Spotify et al to the music industry are shared out between all the different stakeholders. So that’s record labels, music publishers, featured artists, session musicians and songwriters. Many argue that under the current model labels get too big a slice of the digital pie and that the share received by artists and songwriters should be increased.
At the moment, quite what share any one artist receives of streaming income is entirely dependent on the deals they have done with their record label or music distributor. Of the money paid by the services to the record industry, an artist could get 100% if they are working with a DIY distributor, 50-80% if they are working a distributor providing more services, 20-50% if they are working with a label on a relatively modern deal, or less than 20% if they are stuck with a pre-digital record contract.
One much-discussed proposal during the Parliamentary inquiry was the extension of performer equitable remuneration to streaming.
Under current UK copyright law, when the so called performance and communication elements of the sound recording copyright are exploited – which would include radio, TV and when recordings are played in a public space – all performers, including session musicians, have a statutory right to payment. That means that label and distribution deals become irrelevant, all performers get paid royalties at industry standard rates directly via the collective licensing system.
ER does not apply to streams because it has been decided that streaming actually exploits the reproduction and making available elements of the copyright. And while the making available element is often seen as a sub-set of the communication element, UK copyright law explicitly says ER is not due on the former. But the new letter to Johnson urges the government to change the law so that ER does apply to making available.
“Today’s musicians receive very little income from their performances – most featured artists receive tiny fractions of a US cent per stream and session musicians receive nothing at all”, it states. “To remedy this, only two words need to change in the 1988 Copyright, Designs And Patents Act. This will modernise the law so that today’s performers receive a share of revenues, just like they enjoy in radio. It won’t cost the taxpayer a penny but will put more money in the pockets of UK taxpayers and raise revenues for public services like the NHS”.
There are pros and cons to applying ER to streams. While it’s true that extending ER to making available in law requires only a nominal change to the Copyright Act, working out quite how ER payments from streaming would then work in practical terms is somewhat more complex.
With radio, 50% of royalties collected are allocated to ER. Though because a stream is part reproduction and part making available – and ER would only apply to the latter – the ER payment on a stream might be 50% of 50%.
So would that mean that 25% of any monies collected by a label or distributor on streams would be paid to collecting society PPL and then passed directly onto the artist? Or would PPL have its own direct relationship with the streaming services? All of that would need to be worked out.
Labels in the main – major and indie – are against ER on streams, presenting various arguments in opposition to such a proposal, including that it would have a negative impact on their ability to invest in new talent.
It’s also not a given that all artists would be better off if ER was applied to streams. Once the costs of administrating the ER system are taken into account, plus session musicians have been paid their cut, featured artists currently working with distributors – or on particularly favourable record deals – could actually be worse off. However, at the same time, session musicians and artists on unfavourable old record deals would definitely benefit.
So, a simple change to law yes, but a move that would raise a whole load of questions, which would likely need to be addressed in first instance by the music industry rather than law-makers.
As for increasing the share of streaming income received by songwriters, that would partly require a higher portion of streaming income being allocated to the song copyright rather than the recording copyright. Of the money paid by the streaming services into the music industry, currently approximately 80% is allocated to the recording and 20% to the song.
During the parliamentary inquiry, there has been some talk about how the majors are big players in both songs and recordings. However, because of industry conventions, when money flows through the majors’ labels on the recordings side they usually get to keep a majority of the cash, whereas on the publishing side the majority is paid over to the writer.
Therefore, it’s alleged, the majors have an interest in the status quo, and have exploited their market dominance to ensure that recordings get a much bigger slice of the digital pie.
“There is evidence of multinational corporations wielding extraordinary power and songwriters struggling as a result”, the letter states. It notes how with radio income songs and recordings earn more or less the same, compared to the 80/20 split in streaming. “An immediate government referral to the Competition And Markets Authority is the first step to address this”, they go on. “We believe that in a truly free market the song will achieve greater value”.
The letter then concludes: “Ultimately … we need a regulator to ensure the lawful and fair treatment of music-makers. The UK has a proud history of protecting its producers, entrepreneurs and inventors. We believe British creators deserve the same protections as other industries whose work is devalued when exploited as a loss-leader”.
“By addressing these problems, we will make the UK the best place in the world to be a musician or a songwriter, allow recording studios and the UK session scene to thrive once again, strengthen our world-leading cultural sector, allow the market for recorded music to flourish for listeners and creators, and unearth a new generation of talent”.
Among the artists putting their name to the letter – which has been organised by the Musicians’ Union, Ivors Academy and Tom Gray’s #brokenrecord campaign – are Damon Albarn, Gary Barlow, Fiona Bevan, Billy Bragg, Kate Bush, Badly Drawn Boy, Brian Eno, Paloma Faith, Shy FX, Gabrielle, Nigel Godrich, Kano, Soweto Kinch, Beverley Knight, Laura Marling, Chris Martin, Paul McCartney, Laura Mvula, Kate Nash, Nitin Sawhney, Mike Skinner and Jessie Ware.
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