UK government calls in industry leaders to consider streaming reforms

"The publication of the [DCMS] committee’s report is a key moment for the music industry"

The UK government has called in a number of music industry leaders to help consider streaming reforms in response to the DCMS Committee’s recent report on the economics of streaming.

The Department for Digital, Culture, Media and Sport (DCMS) Commons Select Committee have been examining the business model for streaming since last year and whether or not the model is fair to songwriters and performers.

Over the summer, MPs stressed the need for a “complete reset” of the music industry to address the “pitiful returns” that artists receive. It came as part of a report from the Economics Of Music Streaming inquiry.

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The inquiry saw the DCMS hear evidence from the likes of Radiohead, Elbow and Nadine Shah. Back in April, over 150 artists – including Paul McCartney and Kate Bushsigned an open letter to Prime Minister Boris Johnson asking to help reform the streaming economy.

Today (September 22), the government revealed an action plan for the next 12 months, which will involve working alongside the music industry to form a contact group that will scrutinise the key issues.

“The publication of the committee’s report is a key moment for the music industry,” the government said in its official response to the report.

Although the report noted the success of streaming and its growth to become the main revenue source, the government also recognised concerns about how those revenues are shared.

Spotify
CREDIT: Getty Images

“But although overall music revenues are growing, many more creators are competing for a share of them, and there are many different and strongly-held views about how streaming revenue should be split to ensure fair outcomes,” the government said. “There is also concern that our regulatory frameworks, including copyright, have not kept pace with the changes brought about by streaming.”

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Government action won’t be immediate. The debate about the future of the streaming economy will continue for at least another 12 months, following the publication of a government timetable.

“More targeted research and evidence is needed before the government can decide what action it should take on some of the issues highlighted by the committee,” the report reads.
Ministers will work closely with music creators, record labels, and streaming services to develop a work programme. According to the report, these will include:

  • Establishing a music industry contact group with senior representatives from across the music industry. This group will convene this autumn and meet regularly over the next 12 months to drive action and examine stakeholder views on the key issues, including equitable remuneration, contract transparency, and platform liability rules introduced by the EU. This will complement separate ongoing work with industry to address broader welfare issues, such as bullying, harassment and discrimination, in the creative industries.
  • Launching a research programme, alongside stakeholder engagement, in autumn 2021, with a progress update in spring 2022.
  • Establishing two technical stakeholder working groups during the autumn of 2021. The first will work to agree standards for contract transparency and establish a code of practice for the music sector, and the second will address data issues and develop minimum data standards for the industry. Both will be expected to update on progress after six months. We will also commission and publish an industry guide on data management in the music industry.

In spring 2022, the government will update the music industry contact group and consider whether to take forward legislation in any areas. This review process will be repeated in the autumn of 2022.

On the Committee’s proposal for a requirement to make royalty chain information fully transparent, the government said it is an issue that “the industry can, and should, seek to fix itself”. But it is attempting to prompt them into action.

Streaming
CREDIT: Getty Images

Responding to the government’s action plan, a spokesperson for the BPI said: “Competition in the UK music industry is fierce. As the government observes, streaming has provided more routes to market for artists and creators. We note the government’s response that the CMA is an independent regulator and any decision to conduct a market study rests with them. Should the CMA conduct a study, we look forward to detailing labels’ role in supercharging the careers of British talent within a complex and dynamic ecosystem.

“At a time when much of the UK music sector has come under pressure as a result of the pandemic, recorded music has returned to growth and continued to invest, benefitting the wider music community when most needed. We welcome government’s recognition of the need for a better understanding of the complexity of the music streaming market, and that industry action to address issues of concern is preferable to legislative intervention that may negatively impact performers, jeopardising the hard won return to growth after years of decline – and harming music creators and UK music’s global competitiveness.

“We look forward to participating actively in further research and industry working groups on transparency and metadata. Streaming means that more artists are succeeding commercially than ever before.  Supporting further market growth and preserving UK music’s dynamism, investment and innovation is the most effective way to ensure that even more artists benefit.”

Deputy secretary general of the Musicians’ Union Naomi Pohl said: “It is fantastic that the government is willing to further investigate streaming economics with a view to ensuring performers and songwriters get a fairer deal. The government’s response to the DCMS Select Committee’s report shows a willingness to engage with our key concerns around unfair remuneration and address what the report described as “deep concerns” around the dominance of the major music companies.”

Graham Davies, CEO of The Ivors Academy, said: “This is an exciting moment and opportunity for change which we fully embrace. We are pleased the government has recognised that the global streaming environment must be transparent and fair. They have accepted that the music industry is failing in a number of areas, and needs help to embrace this modernisation and reform agenda. Like us, the Government sees the growth and benefits that will come from a modern music industry that properly rewards creators.”

Tom Gray
Tom Gray. CREDIT: Press

Tom Gray, founder of the #BrokenRecord Campaign, wrote: “The government have accepted that our critique and the inequities facing music-makers are all too real. But the tens of thousands of British musicians, songwriters, producers and artists are not merely ‘stakeholders’. Unlike multinational corporations, we are citizens, constituents and taxpayers. Now is the time to redouble our efforts and challenge our political leaders to truly represent us. Change is possible and should be made real.”

Merck Mercuriadis, founder of Hipgnosis Songs, said: “The government’s decision to refer the major music companies to the CMA is a very positive next step in our collective efforts to rebalance the industry in favour of songwriters and artists. The government’s recognition of the imbalance that exists for the Songwriters, Artists and Producers, without whom there is no Music business, and its willingness to invest 12 months into ensuring it comes to the right conclusions gives us many reasons to be cheerful.

“The CMA and the government must now act rapidly to tackle these issues and Hipgnosis is committed to playing an active role in the important discussions ahead, advocating on behalf of songwriters and artists to ensure that the necessary steps are taken to give them a bigger slice of the pie. It’s a timely response with Universal’s very successful IPO yesterday and the positive knock-on effect it has had on Warner Music. This demonstrates there is plenty of abundance in our industry to share with the creators that are our lifeblood. In the wake of that, I also believe those companies will come to the conclusion that it’s in their own best interest to be important catalysts for the changes that are critical not only to songwriters and artists, but to their own future wellbeing.”

David Martin, CEO, Featured Artists Coalition and Annabella Coldrick, CEO, Music Managers Forum, added: “In the week where recorded music companies hit stellar valuations due to the streaming boom, we are pleased to see that the systematic inequalities faced by generations of artists, songwriters and musicians, which were highlighted by this groundbreaking inquiry are now being acknowledged by the government. It’s encouraging to see the government agree that regulatory frameworks, including copyright laws, have not kept pace with the changes brought about by streaming.

“As the FAC and MMF have continually advocated through our Dissecting the Digital Dollar work, addressing these issues will require both legislation and industry change.

“On this front, we are especially pleased that the majority of arguments detailed in our recent White Paper have been acknowledged. We fully support the push for a full-blown investigation of the recorded music market by the Competition & Markets Authority building on their recent work with AWAL and Sony.  We also have long called for the creation of an industry forum overseen by government – now called the ‘contact group’ – to drive forward changes across the recorded and publishing sectors in areas such as contracts, licensing, transparency and welfare.

“However, we find it a pity that the issues around royalty chains, transparency and black box distribution have not been adequately acknowledged, as current legislation overseeing CMOs is ineffective. We hope that these can be explored further within the contact group.

“The government using its influence to pressure our sector to agree to a modern code of practice covering all these issues would be a big leap forward and, as part of the contact group, both the FAC and MMF stand ready to contribute.”

Warner Music

The government has also asked the Competition and Markets Authority (CMA) to consider an investigation into the top three labels: Sony, Warner and Universal Music.

It has also suggested that the CMA looks into YouTube’s dominance over the music streaming market.

Julian Knight, who is the chair of the DCMS, has now said that although streaming sites “brought significant profits to the recorded-music industry, the talent behind it – performers, songwriters and composers – are losing out”.

Knight has urged the CMA to look into the commercial power held by major labels, claiming that they receive beneficial treatment over indie labels and acts who self-release their material. This includes prominence on popular playlists and in storefronts.

The government said in an official response that while there “may be value” in such an investigation, it was ultimately up to the CMA to decide whether to go forward with the inquiry.

The statement added: “We have written to the CMA on this recommendation.”

The British Phonographic Industry (BPI) said it would comply, “should the CMA conduct a study”.

“We look forward to detailing labels’ role in supercharging the careers of British talent within a complex and dynamic ecosystem,” it continued.

Following the DCMS findings being published in July, Tim Burgess told NME: “We’ve known for years that so much of the income generated by streaming doesn’t reach the artists, through campaigns like #BrokenReCord we’ve learned that lots of the funds reach major labels but are syphoned away from the people that make the music that makes money.

“Archaic contracts mean that artists are unpaid for the longest time.”

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