Artists speak out at the UK Economics of Music Streaming Inquiry

Artists have spoken out about the inequity of the music streaming business model. Artists including Ed O'Brien (Radiohead), Guy Garvey (Elbow), Tom Gray (Gomez), Nadine Shah, Fiona Bevan, Soweto Kinch and even Songwriter, producer and artist, Nile Rodgers have all given evidence in the UK government inquiry. Today, Led Zeppelin's Jimmy Page published a public letter of support. Here is an overview of the inquiry, and the key issues discussed in the two evidence sessions so far: 

The economics of music streaming inquiry

Music streaming accounts for more than half of the global music industry’s revenue in the UK, bringing in more than £1 billion in revenue with 114 billion music streams in the last year. Whilst, the 3 major labels are reporting record highs in profits, the Ivors Academy reports that 8 out of 10 songwriters earn less than £200 a year from streaming. The inquiry comes after the Ivors Academy and Musicians’ Union have been campaigning to Fix Streaming.

The Digital, Culture, Media and Sport Committee, chaired by Julian Knight MP, are now examining the impact of music streaming on artists, record labels and the sustainability of the wider music industry. The Committee are also considering whether the UK need an equivalent of [what they call] the Copyright Directive [otherwise known to us as the Digital Single Market Directive]. 

Streaming royalties v radio remuneration

It has been noted in the Inquiry so far, that in some ways steaming can be akin to radio when the user passively listens to an algorithmic playlist, but it is different when the user makes their own selection. From a technical perspective, the radio broadcast and online stream transmission are two different technologies. 

 

However, from a copyright law perspective, both are captured by copyright infringement as communication to the public. Section 20(2)(a) of the Copyright Designs and Patents Act (CDPA) 1988 confirms “communication to the public by electronic transmission, and in relation to a work include - (a)the broadcasting of the work." In fact, the origins of communication to the public are found in the development of the copyright holder’s right to restrict performance of their work. The WIPO Copyright Treaty 1996 which rationalised and synthesised this protection by establishing full coverage of the communication right, intended to provide a technology-neutral right, where the technical means by which the communication was made was irrelevant, in order that any future technical development be included within the provision.

Why does this matter? Well, it has an impact on the remuneration the artists can receive. PPL currently has the right to license the online transmission of radio, television and certain types of online streaming services, including live streaming and customised streaming. But, PPL does not license music services that offer downloads or on-demand streams of individual music tracks, such as Spotify and Apple Music, or services that enable the upload of content by the general public, such as YouTube and Facebook.

In the music industry, the usual arrangement is that the record label, who own the sound recording of a song, licence their catalogue to a streaming platform such as Spotify. Spotify keep 30%, and give 55% to the record label and 15% goes to the publisher (who owns the copyright in the musical work). When the artist signs a recording contract with the label, who make a financial investment into the artist by paying for the recording of the track as well as through marketing of the music. This investment is recouped, not from the profit of the sound recording, but from the royalty. This means it typically takes a long time for artists to receive royalties, if ever.

Artists are unable to make rent on their current income. Nadine Shah

1) Equitable remuneration 

The committee heard from several witnesses that equitable remuneration could be a solution for the current financial struggles that artists are facing. The CDPA 1988 already provides a right to equitable remuneration for exploitation of sound recording of performers rights, and for the rental of copyright and performers rights. Under section 182D CDPA 1988 the performer is entitled to equitable remuneration when the sound recording is played in public or the recording is communicated to the public, from the owner of the sound recording. In relation to the rental right, equitable remuneration is provided under sections 93B (for copyright) and 191G (for performers rights) of the CDPA 1988. 

However, there is an exclusion under section 182CA(1): a recording of the whole or any substantial part of a qualifying performance by electronic transmission in such a way that members of the public may access the recording from a place and at a time individually chosen by them. Meaning, making available and thereby excluding digital downloads and streaming. 

Evidence from CC Young argues that Section 182 is not consistent with EU Related Rights Directive 92/100/EEC – Article 8 or Rental & Lending Rights Directive 2006/115/EC.

As such, the artists argue that equitable remuneration should apply to a stream - by way of making available of their performance in the sound recording - so that on top of the existing arrangement between the labels and the platforms, and the labels and the artists, PPL can collect a royalty payments when a song is streamed, and distribute it 50/50 between the artist and the label. The result would be no change for the platform, or songwriter, but a deduction in the earnings of the label and an increase in the earnings of the artist. This mechanism would also circumvent the label and therefore avoid being lost in the recoupment debt, creating an actual income stream for artists. 

José Luis Sevillano, Director General at Artistas Intérpretes o Ejecutantes, Entidad de Gestión de Derechos de Propiedad Intelectual (AIE), gave compelling evidence of the successful implementation of similar mechanisms in several European countries such as Spain and the Netherlands. He said: "Finally, the performers have their own voice, can negotiate their own deals, and get fair remuneration. It is successfully in place in Spain since 2006, legally recognised and conforms with the Treaties."

The system as it is, is threatening the future of music. Equitable remuneration is a viable first step. Second step is transparency. Guy Garvey

2) Transparency 

There are several transparency issues on the table. Firstly, the deals the labels make with the platforms are protected by Non-Disclosure Agreements, so the artists have no idea what the value or scope of the licence is. Secondly, the data around the use of songs, the accounts and payments made is not transparent. This means that the data is not auditable, and the inaccuracy of the data can also mean songwriters and composers not being recognised for their work.

Every time I audit the record label, I find money, every time! We must have transparency. Nile Rodgers

Evidence provided from Maria Forte, (Managing Director at Maria Forte Music Services Ltd), stated that "Metadata is so important in order to account for payments to be made. The data goes from the label to the digital service. The artwork, the music and the metadata. The data identify the songs and the composers. Some labels don’t identify the composer and this makes it difficult for collecting societies to identify composers. They are not working together to fuse the data that they use. It is fragmented and difficult. There is huge amounts of data. It should be compulsory for labels to provide meta and writer data."

 3) Copyright should revert back to the creator

Under US law creators can, in certain circumstances, terminate a transfer or assignment of their copyright after 35 years (US Copyright Act 1976 s 203). For songs created on or after 1 January 1978, the creator can send a notice and terminate the agreement. This is a unique rule under US law and does not apply in any other country. Given the exclusive nature of the record deals, and the extent of the one-sided contracts which artists are unable to negotiate, it seems fair to enable artists to claim back their copyright after a certain period of time.  

The music industry is the only industry where you pay the mortgage and they still own the house. Nile Rodgers

And one more thing, Playlisters 

This is not something directly asked for by the artists, but is something that I included in my evidence to the committee. Currently, playlisters are people who create playlists that users follow. Playlisters earn revenue by creating playlists that directly impact the discovery of music and therefore the remuneration to artists and songwriters. However, the users and the artists are not informed of the playlisters' earnings, benefits and deals which are made in order to get certain songs on their playlist. Therefore, in my evidence I recommended that this activity should be considered as influencing, and as a result be regulated by the UK Advertising Standards Agency (ASA) which works with social media platforms and influencers. The ASA provides specific guidance for influencers, which applies when a person is paid in some way, regardless of how many followers they may have. 

The call for evidence is still open, you can submit evidence until Friday 11 December 2020.