UK Government responds to DCMS Music Streaming Inquiry recommendations

Readers will no doubt be aware of the recent UK Economics of Music Streaming Inquiry by the Digital Culture Media and Sport Committee [Katposts here], which investigated the impact of music streaming on artists remuneration, as well as other issues around the fairness and sustainability of the wider music industry. Subsequently, the Committee published a report which set out a number of recommendations to Government [Katpost here] that included equitable remuneration for streaming, contract adjustment as well as referrals to the Competition and Markets Authority (CMA) and the Advertising Standards Agency (ASA). The Government has now published its response to these recommendations. The content of the response is summarised below, the potential impact of the recommendations was considered in this previous post here. 

In its response, the Government acknowledged that there is a concern that our regulatory frameworks, including copyright, have not kept pace with the changes brought about by streaming. While stating that the Committee’s report provided invaluable insight, it also noted that more targeted research and evidence is needed to inform the action that it should take. As such there were three main pillars to the Government's response: 

 Quote from episode 1 of podcast
 Whose Song Is It Anyway?

1 Establishing a music industry contact group with senior representatives from across the music industry to drive action and examine stakeholder's views on the key issues, including equitable remuneration, contract transparency, and platform liability rules introduced by the EU.

2 Launching a research programme, alongside stakeholder engagement

3 Establishing two technical stakeholder working groups. The first will work to agree standards for contract transparency and establish a code of practice for the music sector, while the second will address data issues and develop minimum data standards for the industry.

Equitable Remuneration

Recommendation: The committee recommended that the Government explore ways to provide performers with a right to equitable remuneration when music is consumed by digital means.

Government Response: The Government stated that this is a complex area and it takes the concerns of music creators seriously. Therefore, it stated that it will launch work to better understand issues of fairness in creator's and performer's remuneration. As part of this work the Government will assess different models, including equitable remuneration and the artist growth model, to explore how they are likely to affect different parts of the music industry and how that might be achieved, including through potential legislation. It will also explore these issues through the music industry contact group.

Hosting safe harbour & DSM Directive

Recommendation: The Government must provide protections for rightsholders that are at least as robust as those provided in other jurisdictions. To address the market distortions and the music streaming ‘value gap’, the Government should introduce robust and legally enforceable obligations to normalise licensing arrangements for UGC-hosting services. It must ensure that these obligations are proportionate so as to apply to the dominant players, such as YouTube, without discouraging new entrants to the market.

Government response: The Government agreed that rightsholders should be properly remunerated when their works are used and shared online, for example on user-generated content platforms such as YouTube. At this point, it stated that the UK has a unique opportunity to learn lessons from EU Member States that have implemented the Directive, as well as from approaches taken by other countries. It noted the complexity and controversy of some of the provisions – notably Article 17. The Government will analyse how EU Member States are implementing, to understand its impact on different parts of the music industry, other creative sectors, and on user-generated platforms alike. 

Expanding creator rights with restrictions to contract freedom

Recommendation: The Government should expand creator rights by introducing, in the CDPA 1988, a right to recapture works and a right to contract adjustment where an artist’s royalties are disproportionately low compared to the success of their music. The report suggested that the right to recapture should occur after a period of 20 years, which, it states, is longer than the period where many labels write off bad debt, but short enough to occur within an artist’s career. 

Government response: Further analysis is required, so the Government will commission research on these issues, particularly by looking into countries that have implemented similar measures.

Launching Competition and Markets Authority Investigation 

Recommendation: Refer a case to the CMA, to undertake a full market study into the economic impact of the majors’ dominance, including that the Government provide resources and staff to enable the operation (since the CMA is currently very busy!).

Government response: The CMA is an independent regulator, but the Government has directed the Committee’s recommendation for a market study into these issues as there may be value in a market study, but it is for the CMA to decide how best to use its resources to deliver its objectives in making markets work well for consumers and businesses. 

The CMA’s initial response was also included in the Government response, which stated that the strategic market status framework is under consultation. But that the evidence brought to light by the Inquiry will be drawn upon when the new digital markets framework comes into force.

Advertising Standards Authority (ASA) to regulate playlist curators

Recommendation: Where curators are paid, or receive benefits in kind, for playlisting, the report recommends that they are subjected to a code of practice developed by the ASA, similar to social media influencers, to ensure that the decisions they make are transparent and ethical. [Evidence submitted by this Kat's evidence here].

Ready for the next steps
Image: KaCey97078

Government response: The Government agreed with this recommendation and has already engaged with the ASA, which has highlighted that every instance of the interaction of commercial and editorial expression requires consideration on its own merits. The Government has also engaged with Ofcom. The case for further intervention needs to be carefully considered and the Government will look to gather further evidence to explore this complex issue further. 

Overall, it's clear that the recommendations of the Committee were thoroughly considered by the Government, which agreed with many of the concerns and issues raised, and in particular has demonstrated tangible steps to move forward with further investigation into potential solutions.