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Major label dominance and making available back in the spotlight at final Parliamentary session on streaming

By | Published on Tuesday 23 March 2021

Houses Of Parliament

After all the various discussions as part of Parliament’s review into the digital music market over how a stream should be defined, government officials at the latest hearing yesterday stressed several times that, in their opinion, modern streaming platforms were exactly the kind of services that the so called making available right was conceived to cover.

Ministers also discussed how many more options artists have for getting their music to market today, although culture minister Caroline Dineage said there might still be a role for the Competition & Markets Authority to review the dominance of certain major players.

Two ministers and two government officers took part in the final oral hearing as part of the economics of steaming inquiry instigated by the culture select committee: culture minister Caroline Dinenage and business minister Amanda Solloway were joined by Robert Specterman-Green from the Department For Digital, Culture, Media And Sport, and the CEO of the UK’s Intellectual Property Office, Tim Moss.

When asked about the dominance of the majors in the recorded music market, Dinenage echoed arguments presented by both major and indie labels during the inquiry to the effect that – while the three major music rights companies are dominant in terms of market share – for new artists starting out there are many other options for getting recordings to an audience other than signing to a major.

That includes launching your own single artist label and buying in distribution and marketing, increasing the risk for the artist in the short term, but also the rewards – if it works – in the longer term.

All of which is true, of course. Though, possibly one of the weaknesses with this inquiry has been that it hasn’t always fully distinguished between the challenges faced by new artists versus heritage artists versus session musicians versus songwriters.

Everyone is keen to stress that supporting new and future talent is the top priority, and we all know that launching a music career in such a crowded marketplace is no easy task. Although when it comes to inequities caused by industry deals and infrastructure, that often impacts on heritage acts, session musicians and songwriters much more. And increased choices for new artists releasing music doesn’t necessarily address those inequities.

And, while new artists do have much more choice when it comes to business partners, some argue that the majors still exploit their market dominance in a way that gives them unfair competitive advantage. Whether that’s in terms of having preferential access to streaming audiences, or being able to block new rivals with game-changing alternative business models from gaining traction, or reinforcing the status quo when it comes to how streaming money is split between recording rights and song rights.

MPs raised various competition concerns during yesterday’s oral hearing, leading to Dineage observing that more investigation might be needed in that domain, possibly involving the CMA.

As for the ongoing debate over how to define a stream – is it like a CD sale, or a CD rental, or a broadcast? – Dinenage acknowledged that, from a user-experience point of view, it can be all three, depending on how any one subscriber uses a service. But when the debate turned to how a stream should be defined in copyright law terms, both Specterman-Green from DCMS and Moss from the IPO were pretty adamant that, as the labels argue, streaming exploits the making available element of the copyright, rather than the rental or communication controls.

Moss told MPs that the making available element of the copyright, first conceived in the 1990s, was “introduced to deal with things exactly like streaming. It is embedded in international agreements and is designed for the streaming environment”. And, in that regard, he added, the IPO believes that the current copyright regime is fit for purpose.

The reason for the endless “is it rental, is it communication, is it making available?” debate during this inquiry, of course, is performer equitable remuneration.

Any performer who appears on a recording has a statutory right to payment at industry standard rates through the collective licensing system when the rental or communication elements of the copyright is exploited. But not making available. In the latter scenario – and therefore with streaming – only the copyright owner receives payment, which it shares with performers subject to contract.

Therefore, for main artists – aka featured artists – their cut depends on what their record or distribution deal says – and new payments may be subject to the recoupment of advances and other expenditure. And for session musicians, there are usually no payments beyond the original session fee. Many artists argue that ER should, in fact, be paid on streaming.

Responding to the DCMS and IPO position that the labels are correct to define a stream as exploiting the making available element of the copyright, committee member Kevin Brennan MP took an alternative approach to the ER debate.

Parliament had granted performers those automatic rights to payment from the performance and communication of their recordings because it was felt that it was important that all musicians were fairly remunerated for those uses of their music. A big part of that remuneration comes from radio. But the streaming services are competing with radio, meaning radio revenues are likely to peak.

Shouldn’t government be more concerned that, once that happens, those remuneration rights Parliament granted musicians will become less valuable? Shouldn’t copyright law be reformed now to deal with that? Ministers and officials said that they would look into the matter further, but didn’t promise any major overhaul of UK copyright rules anytime soon.

With government, as well as industry, now having been questioned by MPs, the culture select committee will start work on its recommendations for addressing the challenges and issues with the economics of streaming.

It remains to be seen to what extent those recommendations are bold proposals for immediate legal reforms rather than calls for more industry collaboration or further investigation. In terms of how the government then responds to that report, it seems likely to embrace more of the latter than the former.

The Musicians’ Union and Ivors Academy – whose #fixstreaming campaign was an impetus for the inquiry – saw both positives and negatives in how government reps answered MPs questions yesterday. They welcomed the indication of government support for a CMA inquiry into the dominance of the majors, but were disappointed by the insistence streaming was all about making available, and the lack of commitment to review the impact of streams on the ER rights of performers.

The two groups said in a joint statement: “At the latest hearing into the economics of music streaming, Minister Of State For Digital And Culture, Caroline Dinenage, supported a referral of music streaming to the Competition And Markets Authority, one of the key asks of the #fixstreaming campaign. A position welcomed by both the Musicians’ Union and The Ivors Academy”.

“It is clear that major labels’ dominance of the music streaming marketplace, together with their record profits, have not gone unnoticed by MPs on the select committee. As well as leaving artists with very little bargaining power, it has also caused an undervaluing of the publishing and songwriting side of the music business”.

They also noted that Dinenage talked about aspects of streaming being akin to radio, which, they said, “supports the MU’s aim to secure a guaranteed income stream for performers on music streaming, similar to that which exists on radio broadcasts”.

However, noting the subsequent making available and ER debate at yesterday’s hearing, they went on, “disappointingly, both Amanda Solloway MP and Tim Moss failed to commit to an update of copyright law to reflect changes in the digital marketplace. They did make a commitment to look into the matter further though and referred to an opportunity to build on the UK’s current copyright regime”.

Ivors Academy CEO Graham Davies added: “The UK leads the world with the quality of our songwriters, composers and artists, but outdated industry structures suppress their incomes. The inquiry has shown that there is strong support for reform to keep the dominant multinational labels in check, provide transparency where there is little, and provide our musicians with sustainable incomes. We welcome the culture minister’s support for a referral to the Competition And Markets Authority, and the committee’s interest in creating an equitable, fair and transparent streaming economy”.

Meanwhile, MU Deputy General Secretary Naomi Pohl said: “Given the evidence they have heard during this inquiry, we are extremely hopeful that the MPs on the select committee will make a case for improving music streaming economics for musicians and songwriters. Caroline Dinenage has helpfully highlighted the similarities between aspects of music streaming and radio, which reinforces our plea for it to attract a similar division of royalties between label and artist as we see for radio play”.

“With just a small tweak to UK copyright law, we could introduce a guaranteed payment to all musicians whether featured or non-featured, recouped or unrecouped”, she continued. “We hope the IPO will engage with us going forward to look at how this could be achieved and what a positive impact this could have on performers’ livelihoods”.

With the inquiry now reaching its conclusion, Annabella Coldrick from the Music Managers Forum – which has been actively researching all these issues and informing all these debates for more than five years now with its ‘Digital Dollar’ project – said she hoped MPs would come forward with some “strong reformist recommendations”.

“Having collected such a breadth of evidence”, she said yesterday, “we hope that MPs on the DCMS select committee will come forward with some strong reformist recommendations on how streaming can function more equitably for music makers”.

“In today’s wrap-up evidence session it was also heartening that the culture minister appeared to acknowledge the need for further investigation into the functioning of the recorded music market, potentially with involvement from the Competition & Markets Authority, and a full review of UK copyright law learning from the implementation of the new directive in the EU”.

“We are particularly pleased the minister sees the value of bringing the industry together”, she added, “and we hope she would want to be part of any future roundtable discussions to ensure the tough issues are addressed in the digital music market. We will undoubtedly need that continued engagement from government in order to deliver much-needed change”.

You can follow all our coverage of the inquiry into the economics of streaming via this CMU timeline here.

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