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BPI cautions against radically changing a streaming model that is “working well for so many”

By | Published on Tuesday 19 January 2021

Houses Of Parliament

Record label trade group BPI says that the booming streaming market has created opportunities for more artists, and a more diverse mix of artists, both at home and internationally.

Those claims are based on new stats which have been published ahead of today’s select committee hearing in the UK Parliament on the economics of streaming, at which major label bosses will have to defend the streaming business, and respond to allegations that the current streaming model isn’t benefiting the people who write and record the music.

The BPI says that 1800 artists achieved more than ten million streams in the UK alone last year. The equivalent of that in terms of old fashioned album sales would be 10,000 units shifted, the BPI argues, and in 2007 that was achieved by 1048 artists. Meanwhile, whereas the top ten artists of the moment accounted for 13% of album sales in 2005, they only accounted for 5% of streams last year, meaning the music market is now less dominated by the superstars.

In terms of global reach, the BPI says “while consumption of British rap and hip hop, along with some rock, remains primarily UK-focused, many British artists are achieving exceptional international success, in particular in genres such as pop, dance and electronica, with 300 British artists now achieving 100 million global streams or more annually”.

The new stats are clearly designed to counter a narrative that streaming has made it impossible for artists to make a living out of their music. Of course, many more artists are now releasing tracks, because doing so is much easier in the streaming age. That means, in percentage terms, the number of artists making a living from their releases is down. However, the BPI wants you to know, the total number of artists achieving success is actually increasing.

That said, whether or not scoring millions of streams at home and abroad constitutes making a living for the artist depends on where those streams occur and how much of the money makes it to the artist themselves. A million streams on a premium subscription service in a mature market is likely bringing in a few thousand pounds. Though how much of that reaches the artist will depend on the deal they have with their label or distributor.

That’s really the key debate in terms of the culture select committee’s streaming inquiry. There continues to be plenty of online chatter criticising the monies paid by the streaming services, and especially Spotify, to the music industry at large. However, the main debate as part of the Parliamentary inquiry has been how that money is shared out between artists, labels, songwriters and publishers.

The BPI acknowledges that fact alongside the new stats, insisting that – while labels may receive the biggest slice of the digital pie – artists are getting more than they did with physical. And also that the share received by labels is justified given the investment they make – financially, creatively and commercially – in new music.

The BPI states: “Artists are receiving a higher share of revenues nowadays than they did in the CD era. As acknowledged by witnesses who have already appeared before the [select] committee, artist royalty rates are typically higher in streaming, commonly ranging between 20-30% – compared to CD era rates more typically at rates of 15%-20% of net Published Price To Dealer (and subject to deductions)”.

Breaking down the digital pie in more detail, it goes on: “On average, based on a typical £9.99 subscription to a streaming service, labels receive gross revenues of around £4.33, of which artists receive £1.33. Of the label’s remaining share of £3.00, costs represent £2.49 (including investment into artists such as A&R and global marketing) – this leaves a label margin of £0.51. The remaining £5.67 is received by: the exchequer (VAT); the streaming service; and publishers and songwriters”.

Of course, plenty of artists and songwriters, and their managers, argue that – while labels may see a smaller share of streaming income compared to physical – the artist and songwriter share on a stream should still be higher. After all, they’d add, significant cost and risk was removed from the label with the shift from pressing and distributing physical product to a primarily digital-based recorded music business.

At the previous select committee hearings it’s been proposed that a bigger slice of the pie should be allocated to the song. And, on the artist side, equitable remuneration could be paid on streams, as it is on radio and public performance, meaning all artists would be guaranteed a minimum royalty oblivious of their record deals.

Having presented its stats and maths, the BPI argues against overhauling the model in that way. Its members, it says, “believe strongly that rather than changing a model that is working well for so many, the focus should be on continuing to grow revenues from streaming and music consumption generally for the benefit of the wider music community, including artists and songwriters”.

With that in mind, it then says, MPs should prioritise things like safe harbour reform, strengthening the negotiating hand of copyright owners when dealing with new digital platforms, ensuring that user-upload and social media services don’t get away with paying much lower royalties to the music community.

None of the arguments presented by BPI today are a surprise, and when the UK bosses of Universal Music, Sony Music and Warner Music are grilled by MPs this morning they are expected to say very similar things.

Campaigners in the artist and songwriter communities calling for an overhaul of the streaming model know all these arguments well, and have plenty of counter-arguments to throw back in return. But it remains to be seen how MPs respond to the label position when presented at the inquiry.

That’s all going to be happening as this edition of CMU Daily is published. We’ll have a report on what is discussed in tomorrow’s edition. You can follow our coverage of the inquiry and access other useful resources providing background and insights on the whole streaming business debate on this CMU Timeline here.