<div>Parliament’s culture select committee to investigate the economics of music streaming</div>

Parliament’s culture select committee to investigate the economics of music streaming

<div>Parliament’s culture select committee to investigate the economics of music streaming</div>
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<div>Parliament’s culture select committee to investigate the economics of music streaming</div>

The culture select committee of the UK Parliament yesterday announced an inquiry into the economics of music streaming.

The committee will consider the current dominant business models in the digital music market; the impact the shift to streaming has had on the music industry at large, and artists and songwriters in particular; and also whether the UK should be looking to adopt some of the music-related copyright reforms contained in last year’s European Copyright Directive, despite no longer being bound by European law.

The inquiry follows the launch earlier this year of the #fixstreaming campaign by the Musicians’ Union and the Ivors Academy – as well as the online #brokenrecord campaign led by musician and songwriter Tom Gray – both of which have called for politicians to put the spotlight on the digital music market. Those campaigns argue that the dominant streaming business model today has been developed to benefit the streaming platforms, the big music companies and/or the superstar artists to the detriment of the wider artist and songwriter community.

Of course, the multi-layered debate about the pros, cons and fairness – or not – of the streaming business model has been ongoing for years, pretty much ever since it became clear that streaming services of the Spotify model were going to become the dominant revenue generators for the record industry, and take that record industry back into growth after fifteen years of decline and stagnation.

However, that debate has gained new momentum this year after the COVID-19 pandemic shut down the entire live sector, cutting off what for many artists was a key revenue stream, and in some cases the primary revenue stream.

While COVID has been catastrophic for live music, the record industry has been much more COVID resistance because of the way the subscription streaming business works. However, many artists and songwriters argue that they don’t really benefit from that side of the music business, because most of the subscription money goes to the record labels and streaming platforms.

Announcing its plans to investigate and scrutinise all this, Parliament’s Digital, Culture, Media & Sport Select Committee yesterday said the new inquiry would “examine what economic impact music streaming is having on artists, record labels and the sustainability of the wider music industry”.

Confirming the concerns of the #fixstreaming and #brokenrecord campaigns would be a key part of the inquiry, the committee also noted that streaming “currently accounts for more than half of the global music industry’s revenue” and “brings in more than £1 billion in revenue” for the UK music industry, “however artists can be paid as little as 13% of the income generated”.

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As noted, this is a multi-layered debate, which will make this quite a complex inquiry. Part of the problem is that there are so many stakeholders in the streaming music business, including frontline artists, session musicians, record producers, songwriters, composers, record labels, music distributors, music publishers, collecting societies, Spotify-style streaming services and YouTube-style platforms that utilise music.

Pretty much everyone would agree that there are issues with the way the streaming music business currently works. But different stakeholders would identify different issues and different solutions. And even if most people agree that the one really big issue is artists and songwriters not getting a big enough slice of the digital pie, even with that the specifics of the issue and the possible solutions are probably different for new artists, heritage artists, session musicians and songwriters.

And that one big issue is affected by many of the other issues, including the pricing of subscription streaming; the impact of free-streaming and user-upload platforms; the methodology employed in royalty calculations; the definition of a stream in copyright terms; the traditional slicing of music rights; the interpretation of old contracts in the context of new services; and widespread confusion over how the streaming business model actually works, exacerbated by the regular distribution of highly misleading per-play royalty price lists.

Oh, and national copyright law variations and old territorial industry frameworks struggling in the age of global services; the constant exploitation of non-disclosure agreements by services, labels, publishers and collecting societies; the numerous music rights data problems; and the downsides of streaming removing the barriers to market for new artists, and simplifying access to and therefore boosting the value of catalogue.

Clearly one select committee inquiry can’t delve into all of those things, so a key challenge will be trying to simplify the debate and honing in on just a few key issues and practical solutions. But with each stakeholder group likely to want to focus on a different issue – or a different aspect of each issue – achieving that will be tricky.

And while it’s true that most stakeholders (including even some services) can be united be skewing the conversation towards the copyright safe harbour relied upon by user-upload platforms – and the bit of the good old European Copyright Directive that seeks to reform said safe harbour – that’s not really going to tackle the core problems raised by the #fixstreaming and #brokenrecord campaigns.

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So, all in all, it’ll be interesting to see how this all turns out. Of course, there’s also the other question of quite what the culture select committee can do about all this. Select committees allow MPs to scrutinise issues and make recommendations, although they have no actual power to change government policy.

However, that isn’t to say they can’t be influential. The culture select committee – alongside some of the more informal all-party parliamentary groups – helped to shift the debate in both Westminster and Whitehall on secondary ticketing, ultimate resulting in a change in government policy. And if nothing else, the committee’s inquiry should bring every one of the aforementioned stakeholders to the table, which hasn’t really happened in public since the streaming boom began.

Certainly, all of those different stakeholders yesterday welcomed the inquiry. Naomi Pohl, MU Deputy General Secretary, said: “It is extremely welcome that the DCMS Select Committee has announced an inquiry into the economics of music streaming at a time when musicians are making very little money from live performance due to COVID-19”.

“The Musicians’ Union and the Ivors Academy have been calling for a government review because the current crisis has highlighted that the royalties generated by streaming are far too low and the market is failing the vast majority of our members”, she went on. “We hope this inquiry will show that a more equitable model is possible and that streaming royalties can and should play a significant role in sustaining the careers of creators and artists”.

Meanwhile, Ivors Academy CEO Graham Davies added: “Most creators cannot make a living from streaming, it simply does not pay enough and millions of pounds each year is not properly allocated due to poor data. Following our campaigning with the Musicians’ Union, performers and creators to #fixstreaming this is an opportunity to create a transparent, fair and equitable approach”.

Trade groups for both the labels and the services also welcomed the inquiry, though both noted that they saw it as an opportunity to demonstrate the key role their respective members have played in bringing about a streaming-led revival of the record industry.

Geoff Taylor of record company trade group the BPI stated: “We welcome the opportunity presented by the DCMS Select Committee to examine the impact of streaming on the music industry, including the vital role labels play as the leading investors into new music, to the benefit of fans and the whole music ecosystem”.

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While Kim Bayley of the Entertainment Retailers Association said: “We welcome the decision of the Digital, Culture, Media And Sport Select Committee to shine a light on the huge economic impact of streaming on the music market. Little more than a decade ago the music industry was on the ropes due to piracy. By providing an attractive, convenient and legal alternative, from which around 70% of the revenue goes straight to the music industry, streaming services have provided the biggest boost to music for a generation”.

The inquiry was also welcomed by the Music Managers Forum, which has been exploring and explaining the streaming music business model – and all the issues around it – for more than five years now via the ‘Dissecting The Digital Dollar Project’, which has been delivered in partnership with CMU Insights.

That work has helped managers to better develop each of their artist’s own digital businesses, while also allowing the management community at large to make informed requests and demands of all the other stakeholders in the digital music industry. Some of those requests and demands have already resulted in reform, while others include those set to be considered by the inquiry.

MMF CEO Annabella Coldrick said yesterday: “This is a welcome announcement by the DCMS Select Committee. Managers are at the epicentre of changes in the recorded music business, and the MMF have been at the forefront of debates around streaming through our long-running ‘Dissecting The Digital Dollar’ initiative. We look forward to submitting evidence on behalf of our membership”.

If you are planning on following this inquiry as it unfolds, a good bit of prep would be listening to the two recent Setlist specials that talk through some of the common misunderstandings about the streaming music business. Meanwhile, for a full in-depth analysis of the streaming music model, the reasons it ended up being so complex, all the issues, and all the arguments on those issues from all sides, get yourself a copy of the ‘Digital Dollar’ book from MMF and CMU.

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