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Kevin Brennan MP publishes copyright reforming bill he reckons will fix streaming

By | Published on Wednesday 24 November 2021

Houses Of Parliament

The draft text has been published for Kevin Brennan MP’s Copyright (Rights And Remuneration Of Musicians etc) Bill which, among other things, sets out to apply performer equitable remuneration to streaming.

Brennan is a member of Parliament’s culture select committee, and his bill proposes a number of the changes to UK copyright law that were recommended at the end of that committee’s inquiry into the economics of streaming.

That inquiry spent a lot of time looking at the artist/label relationship, and the impact an artist’s record deal has on what monies they earn from streaming. That’s important because streaming services pay labels and distributors when recordings are streamed, and what share of that money then goes to the artist depends entirely on their label or distribution deal.

And, of course, for heritage artists those label deals were negotiated in a pre-digital age and therefore don’t have specific terms covering streams. Many labels have been accused of interpreting those old record deals in an unfair way, paying physical era royalty rates to artists even though the digital delivery of recordings does not have as many costs attached to it.

The big proposal made throughout the inquiry was that so called performer equitable remuneration be applied to streams. This is the system already employed when recorded music is broadcast or played in public – or performed or communicated, in copyright law terms.

When recorded music is used in that way performers have a statutory right to payment at industry standard rates, oblivious of any deal they may have made with a record label. Performer ER payments are then made through the collective licensing system.

If ER were to be applied to streams, then performers would get at least some of their digital income at industry standard rates via their collecting society, reducing the impact of any record contract terms.

Parliament’s culture select committee – and Brennan’s bill – proposes ER be applied to streams by amending copyright law so that the ER principle also applies to the ‘making available’ element of the copyright, which it is generally agreed is exploited whenever music is streamed.

However, Brennan’s bill says that this new ER right would only apply where “a performer has transferred their making available right concerning a sound recording of the whole or any substantial part of a qualifying performance to the producer of the sound recording”. This is an important exclusion given the number of artists who now self-release their recordings.

For those artists who self-release music – basically via their own labels – by utilising the services of a distributor, a big old shift to ER on streams could actually have a negative impact. For example, an artist currently releasing music via a DIY distributor like Tunecore pays an upfront fee and receives 100% of any subsequent streaming income, usually getting paid within two months from any one stream.

If some of that income was to go through the collective licensing system as ER, they’d have to pay a commission to the collecting society that administers the renumeration right, and there would likely be a time-lag in getting paid as said society processes all the data it receives from each streaming service. However, the exclusion in Brennan’s deal means many DIY artists would continue to be paid entirely via their distributor, avoiding any of the costs and delays of the ER system.

The exclusion relates to the approval rights of performers already provided by copyright law. The default owner of a sound recording copyright is whoever organises a recording session, which was traditionally the label. So the making available control that comes with the sound recording copyright belongs to the label not the artist.

However, performers have their own rights over recordings that they perform on, even when they are not the copyright owner. That includes a making available right. This basically works as an approval right. Copyright owners – usually labels – need to get permission from artists – both featured artists and session musicians – to make available the recordings on which they appear. It’s when artists provide that approval – and “transfer their making available right” – that the ER right would kick in.

Self-releasing artists aren’t transferring their making available right as a performer – because they are both the performer and the copyright owner. Therefore the new ER right wouldn’t apply to those self-releasing artists, and those artists can circumvent the new ER system.

Except – of course – if they use session musicians. Because in that scenario the session musician is transferring their making available right to the main artist, who is the copyright owner. So, ER would be due to those session musicians. Quite how an ER system of this kind would work – ie how does the society administering the system know which tracks involve musicians who have transferred their making available right? – isn’t yet clear, and would need to be worked out.

What would also need to be worked out is what, exactly, equitable remuneration would mean. With broadcast and public performance, 50% of monies goes to the copyright owner and 50% to performers. But that split is by industry agreement and not dictated by copyright law. A different split could be applied to streams. Plus, a stream also exploits the reproduction control of the copyright and the ER right only applies to the making available. On the songs side in the UK it’s been agreed that a stream is 50% reproduction and 50% making available.

The UK’s Intellectual Property Office has already commissioned research into how performer ER might work, and it will likely consider the different ways ER on streams could work, and then assess the impact that would have on artists and labels, and on the different deals and business models artists now enter into when it comes to their recorded music.

The other copyright reforms proposed by Parliament’s culture select committee that are also included in Brennan’s bill relate to contract adjustment, copyright reversion and transparency.

Contract adjustment is about giving artists and songwriters the right to renegotiate old deals that seem unfair in the context of the modern music business.

Or, in the word of the bill, artists who transferred their making available right as described above “shall be entitled to claim … additional, fair and reasonable remuneration from the person with whom they entered into a contract for the exploitation of their rights … in the event that the remuneration originally agreed is disproportionately low compared to all subsequent revenues derived from the exploitation of the rights”.

The right of revocation allows artists and songwriters to reclaim rights they previously assigned, transferred or licensed after 20 years. In the case of songwriters, this would allow the writers to actually reclaim the copyright in their songs, they being the default owner of those rights.

On the recordings side, if and when the label is the default owner of the copyright, performers would seemingly have the right to revoke any approvals they previously made to the label, basically forcing said label to negotiate a new deal to get the required approvals. And that would also likely include session musicians as well as featured artists.

In terms of transparency rights, Brennan’s bill says that artists and songwriters who have transferred rights would be “entitled to receive on a quarterly basis, up to date, comprehensible, relevant and complete information on the exploitation of such performance including all revenues or benefits of any kind generated; and remuneration due”.

Although that would only apply to labels and publishers, not collecting societies, which is a shame given that transparency issues around collective licensing are often as bad as when labels and publishers negotiate deals. Technically societies already have some transparency obligations as a result of a past European Union collective rights management directive – which is referenced in Brennan’s bill – although in practical terms that directive had only minimal impact in making the collective licensing system more transparent.

Most of the proposals in Brennan’s bill – and especially those relating to ER and revocation rights – will be controversial within the wider music community. Indeed, the controversy has been building in recent weeks even before the draft proposals were formally published.

The Intellectual Property Office has also commissioned research on contract adjustment and revocation rights (aka reversion rights), with the government concluding in its response to the culture select committee’s streaming inquiry that all the copyright reforms it proposed needed more investigation. And a working group is also being put together to discuss transparency issues.

Critics of some or all of Brennan’s proposals will argue that that research should be conducted first before any changes to the law are made, to assess the impact on the wider music industry, on all the different ways artists structure their businesses, and on the ability of labels and publishers to invest in new music and new talent. Some of the reforms will also have ramifications beyond the jurisdiction of UK copyright law that also need to be considered.

But supporters of the bill will likely counter that the law-making process isn’t quick. Brennan’s proposals will be discussed in Parliament next week, but – assuming they are not actively opposed – they will then be scrutinised by a committee in the House Of Commons before a final vote, plus they’d also need to be debated and approved by the House Of Lords. And while that process is going through the motions, the IPO can do its research.

And, of course, given how slow copyright reforms usually are – and with the digital music market continuing to evolve pretty rapidly, so that many of the debates about the Spotify streaming business model might seem rather antiquated within a few years – those who have been campaigning for these reforms would like to ensure that the momentum they’ve built over the last year is maintained.

Of course, the government has already said that it reckons more investigation is needed, and generally private member bills in Parliament don’t succeed if they are outright opposed by the party of government. Though supporters of Brennan’s bill hope that – with a number of Conservative MPs having already given public support for the proposals – that it could even go through without formal government backing. We shall see.

You can read the draft bill here, and see responses for various music industry bodies here.