The UK Parliament’s Digital, Culture, Media and Sport (DCMS) Committee has published a report following its inquiry into the economics of streaming. Its findings are clear – “streaming needs a complete reset.”
From the start, MPs acknowledge the conundrum posed by the economics of streaming, pointing to the incredible economic growth of the streaming industry which contributes to hundreds of thousands of jobs and growing exponentially each year, yet failing in terms of real term revenues. This trickles down to performers who are left behind as music companies “experience historic profit margins and continue to consolidate their position as the largest asset owners” in the business. DCMS Chair emphasized: “While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out.”
Testimonials from authors and performers underlined their inability to live off income from streaming, a situation made even worse by the cancellation of all live events due to COVID 19. Although the “pitiful returns” impact all performers, the report points to session musicians who are “frozen out altogether”. Shocking yet not unexpected both during the inquiry and in the report, several performers informed MPs that they and many of their peers “were afraid of speaking out against the status quo for fear” of reprisal by major record labels and streaming services.
The solution to this issue – equitable remuneration. MPs called on the government to introduce a right to equitable digital music remuneration, which would ensure that performers would earn directly from streaming services via a collective management organisation. Present during the inquiry, José Luis Sevillano, DG of AIE in Spain, introduced this concept which has been present for them since 2006. There, “the performers are presumed to have transferred the exclusive right under the terms of their contract to the record label, while their additional unwaivable remuneration right enables them to be paid directly by streaming services when their music is played. Multiple submissions to the inquiry, including our own, promoted this solution.
« 77. We recommend that the Government legislate so that performers enjoy the right
to equitable remuneration for streaming income. Amending the Copyright, Design
and Patents Act 1988 so that the making available right does not preclude the right to
equitable remuneration, using the precedent set by the co-existence of the rental right
and right to equitable remuneration in UK law, would be an effective solution. This
would be relatively simple to enact and would appropriately reflect the diminished (and
increasingly externalised) marginal costs of production and distribution associated with
digital consumption. Furthermore, were the Government to do this by echoing existing
UK law, this remuneration right would apply to the rightsholders (i.e. the record labels)
rather than the streaming services. »
The report addressed further issues such as questionable competition practices to be studied by the CMA as well as “safe harbor”. Stakeholders now await a response, if any, by the government, most likely the IPO and whether a stance will be taken vis-à-vis the majors of the sector such as Universal Music, Sony Music, Warner Music and Spotify.