Streaming – what happens next? Artists demand “a shift in the way business is done”

With pressure mounting for government action to be taken on fair streaming, industry figures tell NME what potential changes we should expect for artists and listeners

Artists and industry figures have spoken to NME about what should and could happen next following the government’s streaming inquiry – calling for a fundamental “shift in the way that business is done” to make payments fairer for musicians.

This week saw over 150 artists – including Paul McCartneyKate BushDamon AlbarnChris MartinNoel Gallagher and Wolf Alicesign an open letter to Prime Minister Boris Johnson to reform the streaming economy and “put the value of music back where it belongs – in the hands of music makers”.

Pressure continues to mount to mount following a recent government investigation. Run by the Department for Culture Media and Sport since November last year, Parliament’s Inquiry into the Economics of Music Streaming committee met seven times, hearing from representatives across the industry.

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During the various hearings, artists told MPs that low streaming payments were “threatening the future of music” with emerging acts complaining that they faced “massive competition” from classic artists due to algorithms. Spotify meanwhile, warned that raising subscription prices could push people to online piracy, while MPs accused one major label boss of “living in cloud cuckoo land” after he claimed that artists were happy with the existing music streaming model.

Tom Gray of Gomez, whose #BrokenRecord campaign helped spark the inquiry, has now told NME that he feels “optimistic about what the report is going to say” and that he thought committee members “realised that there are all kinds of barriers of entry and problems with the playing field which means that even successful people aren’t making money.”

During the inquiry, the Mercury-nominated Nadine Shah argued that “the earnings from my streaming are not significant enough” leaving her “in a position now where I am struggling to pay my rent.” While Gray accepted that “there is no silver bullet” to resolve the streaming income gap, “the dominant music system ought to be putting money in the pockets of British musicians”.

“The present scheme is total revenue split up by total streams, and that is how you get your per stream rate,” Gray told NME, while saying that in a user-centric model “they just take your personal subscription and divide it up among whatever you listen to, just by what you listen to.”

He argued that this “small redistribution of wealth” is “a much fairer way to pay out consumers’ money.”

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Nadine Shah
Nadine Shah. CREDIT: Jim Dyson/Getty Images

However, reacting to Spotify’s testimony that they would “be absolutely open-minded” about the possibility of implementing user-centric models, Gray said: “Lip service is not good enough. We need a whole new modality; we need people shifting the way they do business. It’s not complicated to realise that what we presently have is as bad as it could be in terms of its distribution for musicians.”

For fans, the current pro-rata system – where streaming platforms do not pay artists directly – means that listeners can never be certain their subscription fees are supporting the artists they listen to. But following the inquiry, there appears to be growing support for the adoption of the alternative, user-centric model. Before the hearings had even concluded, SoundCloud became the first major streaming platform to instigate change to a quasi user-centric system.

Announcing the initiative at the beginning of March, SoundCloud said “fan-powered royalties levels the playing field for independent artists by tying pay-outs to fandom.”

Gray accepted that a shift to user-centric is not something the government can influence directly. “That’s down to the record companies and the streaming services,” he said. “If they want to do something progressive and different, do something progressive and different. We’ve put as much pressure on them as we possibly can.”

As a result, the #BrokenRecord campaign has consistently pushed for equitable remuneration, a change they say the government can affect and allowing music makers to be compensated for every play. Following the inquiry, Gray is optimistic: “I think there’s a good chance they’ll recommend it.”

Spotify
Spotify (Picture: Getty)

On why this is necessary, Gray pointed to the decline of broadcasting. “18 to 35-year-olds are not using linear broadcasting anymore – so the existing right you have already chosen to give us is going down by about five per cent every single year.”

“Equitable remuneration would mean that labels can still take their rights into a licensing deal, but a certain percentage of whatever they get, they have to pay directly to performers via a collection society. If you just apply equitable remuneration to some extent to on-demand, suddenly, for the first time in history, money goes directly into the pockets on the first stream.”

However, the Chief Executive of the Featured Artists Coalition David Martin told NME that “there may be a role for equitable remuneration to play, but there is a great deal more research that needs to be done”.

“No one is having a conversation about the featured performer,” he said. “Effectively that will be a deduction from the featured performers’ revenue. All you do is transpose some of those problems from the songwriting side and the publishing side to the recording side potentially.”

For Martin, “the least fair part of the system is legacy contracts.” He expressed concerns about “those who are on single digit royalty rates for contracts that were signed before streaming was even envisaged. Minimum digital royalty rates are a better place to be starting.”

This would therefore mean addressing unfair historical legacy contracts and the recoupment deals enclosed within. Taylor Swift is one notable name who has consistently campaigned for artists to receive a fairer share of streaming revenue from record labels. When signing to Universal in 2017, she brokered a deal which ensured smaller artists would receive a cut of the money generated by streams.

Taylor Swift at the NME Awards in 2020. Credit: Dean Chalkley / NME

In the DCMS hearing, the General Counsel for the independent Beggars Group Rupert Skellett emphasised that “it is unconscionable that some artists with legacy contracts are getting less than a 10 per cent royalty rate for digital”, arguing “our policy is 25 per cent in 15 years. We are the benchmark and they can follow that.”

Crucially, David Martin suggested that this is something the industry can initiate from within, but progress must come from the top. He noted that during the inquiry, “the majors all sat there and talked about how they’re artist-centric and creator-centric, so I think they could prove that.”

The CEO of the Music Managers Forum Annabbella Coldrick agreed that the inquiry represented a positive step for fairness in the industry. However, she told NME that “it covered such broad territory that it’s not clear what recommendations are going to come out of this.”

Agreeing with Martin, Coldrick said she wants the eventual report to encourage industry-wide collaboration. “I’d love to see some really clear recommendations looking particularly at artist contracts and how artists – particularly those who signed deals pre-digital, are being remunerated,” she said.

“Artists do not want to be singled out and they’re worried about repercussions. Whenever I talk to the labels, they say they’ll happily re-negotiate if individuals come to them, but artists are scared to a lot of the time.”

She continued: “It’s all very well having transparency, but you need that in combination with mechanisms to address what we would say are outdated contracts and unfair sharing of revenue.”

And what about YouTube? The Google-owned entity has, prior to the inquiry, managed to sail largely under the radar in the streaming debate. Despite the committee sessions offering the opportunity to examine this position, Coldrick said she thinks the discussion of safe harbour rules is “a bit of a diversion technique.”

“Whenever you talk to labels all they talk about is piracy, and then they talk about YouTube and safe harbour and that’s all they want to focus on,” she said. “The whole point of the economics of streaming inquiry was to look at how much money is getting back to music makers. It wasn’t to look at how much money was getting back from streaming platforms into labels.”

YouTube. CREDIT: Gabby Jones/Bloomberg via Getty Images

Still, YouTube represents a considerable source of untapped income for musicians. Geoff Taylor, Chief Executive of the BPI, summarised the position to the committee: “Safe harbour is essentially a legal protection that has been granted to internet companies where their users upload content. Essentially, it says that if the users upload content – provided that you take it down, if you receive a notice because it is illegal – then you are not liable for that.”

With over 51 per cent of the world’s music listened to through YouTube, this creates a substantial hole for the recorded music industry. Taylor went on to explain “last year, we received something like £35million in the UK for all the tens of billions of music videos, which are largely on YouTube… this is about half of what we earn from selling vinyl records.”

YouTube’s Director of Government Affairs and Public Policy Katherine Oyama defended the site’s position during the inquiry. Their investment in a Content ID system, she said, allows rights holders to identify a copyright infringement and “decide what they want to do.” This includes the option to monetise the content. The Director said that this system had “sent about $5.5billion out to rights holders.”

Despite the testimony of Tony Harlow, the Chairman and Chief Executive of Warner Music, that the “industry would be healthier if YouTube were not able to use safe harbour provisions”, Coldrick told NME that her organisation has “said to the industry, if you want us to stand with you and fight with you, you need to also promise that you’ll share it fairly.”

Now that the inquiry is over, Coldrick said: “We’d love to see the Government convene a roundtable with the labels and publishers to explore the issues and see what they can do to establish a code of practice.

“All the new deals the services are doing, the Facebook deals and the TikTok deals, they’re all lump sum deals being paid to the labels. They don’t communicate at all with the artists and the teams about how that’s going to be shared.”

The next step will see the DCMS committee release a report of recommendations to the government, who will then have two months to respond, and decide what changes should be set in motion.

This comes after Paul Weller recently said that he’ll never support Spotify, calling the financial situation “disgraceful” and “shit for artists.”

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