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Government agrees “principle of transparency” important for well-functioning digital market in Lords debate

By | Published on Tuesday 7 February 2017

Houses Of Parliament

The House Of Lords yesterday debated the need for more transparency for artists and songwriters over how their recordings and songs are being exploited in the digital domain, as Liberal Democrat lord Tim Clement-Jones put forward his previously reported amendment to the Digital Economy Bill.

A representative of the government concurred that “the principle of transparency is an important element of well-functioning markets”, before confirming that ministers intend to continue to engage in the ongoing review of copyright law at a European level – which includes measures to force more transparency on the copyright industries – despite all that Brexit hoo haa.

As previously reported, part two of the ‘Dissecting The Digital Dollar’ report – produced by CMU Insights for the UK’s Music Mangers Forum last year – confirmed that, for the artists, songwriters, managers and lawyers involved in the roundtables that informed the report, transparency was a key issue as the streaming market continues to evolve.

Managers argue that, too often, they and their artists are left in the dark about the deals done between labels, publishers, collecting societies and the streaming services. This means that artists are often unable to properly audit the digital royalties they are paid, and cannot properly assess which streaming platforms offer the best deals for creators, which would help them work out which services they should be championing.

As previously reported, Clement-Jones last month proposed an amendment to the DEB which would force corporate entities that own or control copyrights to meet certain transparency standards when reporting to any creators who are beneficiaries of those rights. The proposed new law had many parallels with the transparency obligation contained within the draft European Copyright Directive.

It sought to oblige corporate rights owners to ensure that “authors, artists and performers shall receive on a regular basis timely, adequate and sufficient information on the exploitation of their works and performances from those to whom they have licensed or transferred their rights as well as subsequent transferees or licensees, [including] information on modes of exploitation, revenues generated and remuneration due”.

The proposed measure sought to provide increased transparency for creators of all kinds, though in his speech in the Lords yesterday Clement-Jones in part focused on the specific challenges faced by artists and songwriters in the music community.

He explained that: “Subscription streaming is set to become the most significant revenue stream for the recorded music market in the near future. Streaming requires a fundamentally new licensing model from those who control the recording and song copyrights, which the digital service providers wish to exploit. A complex model was developed and is now utilised by most subscription services”.

“The evolution of this licensing process for streaming music has resulted in a number of transparency issues for artists and songwriters which have not yet ​been fully addressed”, he added.

“Not least, the presence of non-disclosure agreements between the digital service providers and the record labels, distributors, publishers and collective management organisations, which mean that artists and songwriters are not always allowed to know the revenue share and minimum guarantee arrangements that each digital service provider uses to calculate what the copyrights from which they benefit are due each month. There is also a lack of clarity over how labels and publishers apply contract terms that impact on how creator payments are calculated”.

Referencing the corporate entities that routinely own or control the copyright in music and other creative works, he said: “Some assignees and licensees are exemplary, but by no means all”. Explaining the benefit of his proposals, he added: “Authors and performers under these provisions will have a right to detailed and full statements on the uses of and revenues from their work, unless such reporting is disproportionate”.

He continued: “That in itself would be an enormous improvement on the present situation, whereby authors and artists often do not know how widely their work is used and have no way to check whether payments made to them are correct. This problem can become more acute in the digital age, when work can be disseminated in many ways and there is no physical stock which can be counted to ensure that accounting is correct”.

“Greater transparency would give a powerful message to consumers”, he also reckoned. “As they are generally more willing to pay for copyright-protected works if they know that fair remuneration would reach the original creators”.

Clement-Jones was backed by cross-bencher peer Nicholas Trench, who is also a visual artist and writer. Responding to his fellow Lord’s speech, he said: “I fully support the amendment of the noble Lord, Lord Clement-Jones. I do not have much to add to his thorough analysis of the issue other than to say that the right of artists, authors and performers to know what is being done with their work, and to obtain fair remuneration for the exploitation of it, is incontestable. This amendment would, in an effective manner, enshrine that right”.

He continued: “In one sense, information is money. This amendment will doubtless have hidden benefits in that anything that can be of further help to artists, particularly those who are less well off, to survive and thrive, and, perhaps, to become the high earners of the future, is a worthwhile long-term investment and can only be good for the individuals, the creative industries and the UK economy as a whole”.

Speaking for the government, Peta Buscombe agreed that “the principle of transparency is an important element of well-functioning markets”, adding that “I am aware that some creators and their representatives find it difficult to access information on the use of their works owing, for example, to difficulties in negotiating suitable contractual terms”.

However, she added, ministers were already considering measures to improve matters in this domain as part of the European copyright review. She said: “I am happy to confirm to your Lordships’ House that the government are already engaged in discussions to address this issue. The European Commission has made proposals in this area as part of its current draft directive on copyright, and the UK will actively engage in these debates while we remain a member of the European Union”.

Buscombe also name-checked some existing industry initiatives that seek to address transparency problems, such as the Worldwide Independent Network’s Fair Deals Declaration, before proposing that the transparency issue would be best addressed as part of the ongoing discussions around the European Copyright Directive.

Clement-Jones agreed to withdraw his amendment, and welcomed Buscombe’s agreement that “the principle of transparency” was key to a working digital marketplace, though he noted that, “I am not sure she went so far as to support its incorporation into law”.

If the copyright directive is passed while the UK is still in the EU, the transparency element of that would become law here, though Clement-Jones implied that he would continue to put pressure on the government in this domain, before and beyond Brexit.

Meanwhile, for those UK trade organisations representing artists, songwriters, record producers and artist managers, this remains a key issue, and they will no doubt continue to put pressure on their member’s music industry business partners and lawmakers to secure creators a better picture of how their songs and recordings are being exploited in the increasingly dominant streaming market, both in general and day-to-day.