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ECSA puts the spotlight on safe harbour, digital pie, user-centric and royalty chains in new white paper on “fixing” streaming

By | Published on Friday 7 May 2021

European Composer And Songwriter Alliance

The European Composer & Songwriter Alliance yesterday published a white paper on streaming and its impact on the organisation’s membership, calling for a number of changes to be made to way the digital music market works.

ECSA is the latest organisation to formally join the debate on the streaming business model. That debate, of course, has become more public in the last year after COVID negatively hit many music revenue streams, but premium streaming continued to grow.

That fact put the spotlight back on how streaming income is shared out among stakeholders in the music community. Industry conventions mean that many artists and songwriters only see a minority share of that COVID-proof revenue stream.

From a songwriter perspective, that’s because of the monies paid over by the streaming services to the music industry, around four times more is allocated to the recording rights than the separate song rights. Though there are other issues too in how song royalties get paid.

In its white paper, ECSA puts the spotlight on four specific issues: safe harbour, the song/recording revenue split, how monies are allocated to individual tracks, and the complexity and lack of transparency around royalty chains.

On safe harbour, it summarises the argument about how user-upload platforms like YouTube have exploited the protections provided by the copyright safe harbour in order to get preferential deals from the music industry, despite competing with more conventional streaming services like Spotify.

Article seventeen of the 2019 EU copyright directive is meant to be addressing that of course, by increasing the obligations of safe harbour dwelling user-upload platforms. Noting that the implementation of that safe harbour reform has been slow going to date, ECSA calls for “an ambitious and timely implementation” of article seventeen, ensuring that, when integrated into national copyright laws across the EU, the reform “remains faithful to its objectives”.

On the recording/song split, ECSA unsurprisingly calls for a further re-slicing of the digital pie, so that a higher proportion of streaming income is allocated to the songs.

Echoing what the UK’s Ivors Academy has said during the British parliament’s inquiry into the economics of streaming, it points out that the majors – as both labels and publishers – have a vested interest in the current split, because contractural conventions mean that labels usually pay a minority share of income to artists, while under publishing deals the songwriter gets a majority share. “Those conflicts of interests have a very detrimental impact on music authors and explain to a large extent their very low level of remuneration”, it adds.

In terms of how monies are allocated to individual tracks – before any revenue share splits are calculated – ECSA supports a shift from the current approach – where monies are allocated based on what portion of total streams a track accounts for – to the user-centric system. That would mean each user’s subscription being split between the songs and recordings that specific individual streamed in any one month.

“One argument against the switch to [user-centric] is the costs of changing the system within digital service providers as well as with labels and [collecting societies]”, it acknowledges. However, it then says, “this does not change the fact that streaming has started off on the wrong foot and must be corrected. Having the income divided on a basis of connecting the subscription fee of a listener to the actual music he or she is listening to should be the modus operandi”.

ECSA also supports some other changes to the way monies are allocated to tracks, in some cases endorsing the introduction – or at least consideration – of alternative approaches previously proposed by IMPALA, the pan-European trade group for the independent music community.

That includes some kind of change that means longer tracks earn more than shorter tracks, rather than a play only being counted for royalty purpose at 30 seconds, as is currently the case. And also the so called ‘artist growth model’, whereby the rates paid would be higher on the first round of streams secured by any one track, favouring more grassroots and niche artists.

Finally, ECSA notes that “the value chain for [song] rights is particularly complex, with revenues initially flowing from a streaming service to the author via publishers (and possibly sub-publisher) and/or a [collecting society] and their royalty processing hubs. Along the value chain, revenues diminish due to the deductions that each entity in the chain receives for their services”.

“More transparency is needed about these deductions, especially when sub-publishers are involved or when [societies] use the services from other [societies] abroad. Our members often have difficulties getting clear and transparent information about their royalties and the deductions that have been made, in particular beyond their home countries”.

It then adds that “a faithful implementation” of article nineteen of the aforementioned copyright directive, which seeks to provide artists and songwriters with more transparency over how their music rights are exploited, “has the potential to improve this situation”.

You can download the full white paper here.