British Parliament's DCMS report into the economics of streaming proposes a 'reset' of the music industry by giving more rights to creators

By Emmanuel Legrand

Members of the British Parliament have made a series of recommendations in order to "reset" the music industry in a wide-ranging report, following a seven-month inquiry into the inner workings of the music sector, with a focus on the streaming economy.

  The publication of the report on the 'Economics of music streaming', penned by the Digital, Culture, Media and Sport Committee (DCMS), follows a series of hearings held by the committee as well as dozens of contributions from stakeholders.

  The report paints a picture of the impact of the music streaming business on the music sector and concludes that "despite the streaming boom that has provided a partial economic recovery for the music industry, not all stakeholders have received proportionate benefit." The authors of the report, add that "performers, songwriters and composers receive only a small portion of revenue due to poor royalty rates and because of the valuation of song writing and composition, relative to the recording."

Pitiful returns from music streaming

  For the authors of the report, the "pitiful returns from music streaming impact the entire creative ecosystem." They continue: "Successful, critically acclaimed professional performers are seeing meagre returns from the dominant mode of music consumption. Non-featured performers are frozen out altogether, impacting what should be a viable career in its own right, as well as a critical pipeline for new talent. Those that provide specialist support for creators, either based on commission or working as salaried staff as part of an artist’s business or technical expertise, are also affected, meaning that fewer jobs will be sustained by an otherwise growing sector."

  The report digs into the split of revenues between stakeholders and the debate as to whether a stream is a sale or a rental, the former falling into the "making available" right, while the latter would be similar to a radio broadcast and fall under equitable remuneration.

  Reads the report: "The major music companies and independent record labels have consistently asserted that music streaming is straightforwardly ‘making available’, and therefore performers should be remunerated as though it was a sale. However, this classification does not consider the complexities of streaming that sets it apart from other modes of consumption."

Equitable remuneration as a 'clear solution'

  It continues: "For example, it also has the characteristics of a rental and a broadcast, which are consumed by exploiting copyright controls that provide performers with a statutory right to equitable remuneration. Furthermore, this classification creates inconsistencies in comparison to the song rights. Finally, precluding the making available right from equitable remuneration does not capture the realities of costs associated with the distribution of digital music."

   For the authors, a "clear solution" to the rental/sale discussion would be simply "to apply the right to equitable remuneration to the making available right in a similar way to the rental right." Such a remuneration "would be made to performers through their collecting societies when their music is streamed or downloaded."

  The report also looked into other imbalances and concluded that "in many instances, companies have leveraged structural advantages to achieve seemingly unassailable positions in their relative markets." Streaming services that host user-generated content (UGC) have significant advantages over other services due to copyright ‘safe harbours’, which has led to the dominance of services like YouTube."

Legislative and regulatory reforms needed

  The reports makes the case for "a broad yet comprehensive range of legislative reforms and regulatory interventions to deal with these issues." These include:

> The introduction by the Government of a right to equitable digital music remuneration, in order to address artist remuneration and the disparity in power between creators and companies;

> The introduction  of a right to recapture the rights to works after a period of time ;

> The right to contract adjustment if artists and songwriters' works "are successful beyond the remuneration they receive."

> Calling on the Government to support the independent sector and "take advice from the Competition and Markets Authority as to whether competition in the recorded music market is being distorted" by major music companies;

> Advising the Government to "proactively normalise the requirements on streaming services both within the streaming market and with other modes of music consumption, by placing greater licensing obligations on UGC-hosting services, future-proofing the public service broadcasting prominence regime and addressing ‘payola’ concerns about algorithms and playlist curators."

  “Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do," said Julian Knight, chair of the DCMS committee, who conducted the review alongside a cross-party group of MPs including Kevin Brennan, Steve Brine, Julie Elliott, Damian Green, Damian Hinds and Heather Wheeler. 

Other articles about the DCMS report:

> Reactions to the publication of the DCMS report

> The main recommendations of the report

> An analysis of the report by Emmanuel Legrand

> An interview with Crispin Hunt, Chair of the Ivors Academy