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IMPALA calls for French style agreements on fair digital remuneration instead of ER

By | Published on Thursday 23 June 2022

European Union

The pan-European trade group for the independent music community, IMPALA, has urged European countries seeking to address concerns around fair remuneration in the digital music sector to follow the French approach, not the Belgian approach.

In France a voluntary agreement has been reached within the industry setting a number of new standards, whereas in Belgium a new performer equitable remuneration right has been added into copyright law.

The big digital pie debate around how streaming income should be shared out between artists, musicians, songwriters, record labels, music publishers and the streaming services themselves has been rumbling on for years, of course. However, when the COVID pandemic hit pretty much all music industry revenue streams except streaming, the question of how streaming monies are shared out became an even bigger talking point in the music community.

In terms of what share of streaming income artists receive, that generally depends entirely on what deal an artist has done with a record label or music distributor, and can be anywhere from a few percent to 100% of the money allocated to a recording by the services. But many artists on conventional record deals, where they receive a minority of that money – and especially on old deals, where the rate is often lower – reckon they should get a bigger cut.

There have been various proposals for how aggrieved artists could get a better deal. Many in the indie label community support voluntary initiatives, such as labels paying a minimum modern royalty rate to all artists with recordings in their catalogues – oblivious of whatever any old record deals say – and also writing off unrecouped advances and costs after a period of time. Some indies – most notably the Beggars Group – already do both of those things.

Others have proposed reforming copyright law to help artists get a bigger cut of the money. Possible reforms include providing artists with a right in law to renegotiate old record deals after a period of time or to cancel old deals and reclaim the rights in old recordings.

Or there is the alternative proposal that the performer ER right that already exists for broadcast and public performance income should be extended to streams, so that artists would get at least some of their streaming income directly via the collective licensing system at industry standard rates.

In the UK, all three of those copyright law reforms were included in the Economics Of Music Streaming report produced by Parliament’s culture select committee last year and in the subsequent bill proposed by committee member Kevin Brennan MP. And the UK government’s Intellectual Property Office is currently researching how each of those proposals might work.

However, the UK government’s preference is that the industry reach some sort of voluntary deal around fair remuneration, as well as other issues raised about the streaming economy, such as the lack of transparency in relation to digital deals and streaming income. The majors have already committed to pay through monies on unrecouped heritage acts, though groups representing artists and songwriters will want any voluntary agreement to go further than that.

Elsewhere in Europe, in France a voluntary agreement has been reached between labels and performers that will result in a number of new industry standards, including a minimum royalty rate and some kick backs for session musicians, who don’t usually earn anything from streams under the current system.

The agreement took years to negotiate and the wider industry is still figuring exactly what it will mean in practical terms, but supporters of that approach say it provides a good framework around which to build a fairer digital music economy.

Meanwhile in Belgium, earlier this month the country’s Parliament introduced a new Performer ER right on streams, meaning that streaming services will now pay a portion of their revenues directly to performers, most likely through the collective licensing system.

That new ER right was added as Belgium finally got round to implementing the 2019 EU Copyright Directive. When that directive was being negotiated some campaigned for a new pan-European ER right on streams to be inserted. However, it was not included in the final draft.

But there is an article that says EU member states must ensure that performers receive “appropriate and proportionate remuneration” from the exploitation of their work. That’s a very vague obligation which most EU countries have simply cut and pasted directly into their national copyright laws. But some countries have sought to clarify how that “appropriate and proportionate remuneration” should be achieved.

For example, Germany added a new ER right for performers specifically linked to user-upload platforms. Belgium was set to do the same, but then extended the new ER right to cover all streaming services. It’s thought that new right will probably work in a similar way to Spain and Hungary, where an ER right on streams was already in place pre-Directive.

That means labels will continue to license their recordings to the services and receive payments from said services that they share with their artists subject to the terms of each record deal. But performers will also get their own streaming royalty direct. As a result, the services will inevitably and accordingly seek to reduce the payments they make to labels.

The deadline for implementing the 2019 directive into each EU member state’s national copyright laws was actually a year ago, but twelve countries are still working on it.

Pro-ER campaigners are hoping that more countries might now follow Belgium’s lead by providing a new ER right on streams rather than just pasting a generic line about “appropriate and proportionate remuneration” into law. And Belgian ministers have also indicated that they will be encouraging other countries to go down that route.

But there are pros and cons to the ER approach, and the label community is generally opposed to ER being applied to streams. They argue that it will negatively impact on their ability to invest in new artists and will mean there is less flexibility when it comes to negotiating deals. Plus those artists who basically run their own labels working with distributors could actually be worse off once the admin costs of running ER have been paid.

Based on those arguments, IMPALA has called on those countries that are still to implement the directive to not use that process to introduce a new ER right. Instead, they say in a statement published yesterday, those countries should insert the various elements of the directive dealing with performer rights – as well as the article seventeen provisions around the copyright safe harbour – “swiftly and faithfully according to the text of the directive”.

“The directive”, the statement adds, “has a full performer package [including the] principle of appropriate and proportionate remuneration (article eighteen, which rejected a new right to ‘equitable remuneration’), transparency obligations (article nineteen), contract adjustment mechanism (article twenty) and right of revocation (article 22)”.

“IMPALA has fully supported this package from the beginning”, it goes on, “but does not agree with grafting additional rights, such as new rights for collecting societies or performers to negotiate with digital services for a parallel fee, so called ‘equitable remuneration'”.

Instead, it argues, the best way to achieve the “appropriate and proportionate remuneration” described in article eighteen is via an agreement within the industry similar to that negotiated in France.

That French agreement, it states, “aims both at creating value and the conditions of balanced value sharing. This historic and consensual agreement was concluded by the whole French industry including artists and labels – with IMPALA member UPFI. It is a negotiated solution addressing value in the digital music chain for the first time”.

“The absence of ‘equitable remuneration’ in the French accord underlines that there is no place for this in a modern music market as it would prove disastrous for the local market”, it adds. “This is something that was already rejected by all three EU institutions in their negotiations when the copyright directive was being crafted”.

“Despite this”, it continues, “last week neighbouring Belgium voted a law implementing the directive, for which an ‘equitable remuneration’ provision was added at the last minute, with zero consultation or impact assessment”.

“So-called ‘equitable remuneration’ is simply not equitable in IMPALA’s view”, it then states. “It limits labels’ capacity to invest in new music and reduces their revenues along with the revenues of their artists, as experience in Spain has shown. It also doesn’t fit with self-releasing artist business models, which are more prominent in the modern music market”.

IMPALA then cites the ten step plan on streaming that it published last year, which opposed ER and instead called on labels to pay all artists a “contemporary digital rate”. It adds that the agreement in France – and separate discussions in Sweden – have both advocated something more in line with its proposals.

Expanding on the organisation’s position, IMPALA Executive Chair Helen Smith says: “The Copyright Directive started with the promise of a strong European copyright. But Europe’s copyright will only be as strong as its protections and guarantees if governments stick to the text which, let’s remember, is the result of a carefully crafted compromise and which includes a full package for authors and performers”.

“We have seen recently in France and also in Sweden that so called ‘equitable remuneration’ is not getting traction”, she adds. “We therefore urge member states to confirm their support for the full package of rights in the directive without any additional rights which have the effect of singling countries out, and with them their whole local music scene”.

“Maximising revenues for artists is labels’ raison d’être”, she goes on. “We believe that solutions are at hand when the industry comes together to discuss them. This is what happened in France where an agreement was reached with a very broad consensus after months of collective bargaining. It’s hard work, it’s difficult and it takes time, but it’s the only way to ensure balance for all and preserve the fragile and essential economic model of independent labels”.

This story is discussed on this edition of our Setlist podcast.