Business News Digital Legal

UK government convenes working group to discuss music-maker remuneration from streaming

By | Published on Tuesday 30 May 2023

Music streaming services

The UK government has agreed to convene a music industry working group to discuss music-maker remuneration in the context of streaming. It follows similar government-led work where the focus was data and transparency issues within the streaming business. Music-makers have been calling for a specific remuneration working group for some time.

The earlier working groups were set up in response to the 2021 inquiry into streaming undertaken by the culture select committee in the UK Parliament, and it’s that committee that has confirmed that a remuneration working group is now being established.

Parliament’s inquiry considered an assortment of issues that have been raised about the way music streaming works, with MPs ultimately calling for a “complete reset” of the digital music business. Some of those issues impact on the entire music industry, though others are primarily a concern for artists and songwriters.

When it comes to how music-makers get paid when their music is streamed, there are industry wide concerns about the price point of subscription streaming. Given that the streaming services operate on a revenue share model, the fact the baseline price of a Spotify subscription hasn’t increased since the late 2000s means there is less money to be shared out across the entire music industry, in real terms.

More recently the major record companies have also raised concerns about how streaming monies are allocated to individual tracks each month and the fact functional audio – like mood music and background noise – takes an increasingly big slice of the pie. And those concerns are also shared across the wider music community.

But there are also the debates over how money paid into the music industry by the streaming services is split up, between recordings and songs, and between labels and artists. Especially, in the latter case, when it comes to artists whose recordings are part of the industry’s increasingly valuable catalogue.

Many of those artists are locked into old life of copyright record deals and, depending on how labels choose to enforce those deals, may be receiving a much smaller share of streaming income compared to artists who negotiated their deals in more recent years.

Session musicians who appear on those recordings, meanwhile, usually get no royalties at all when the music is streamed.

The music-maker community has long argued that the streaming business unfairly favours superstars and big corporations over the wider music community. And in the report that came out following their inquiry, MPs on the culture select committee proposed some copyright law reforms that might address some of those concerns.

The label community is somewhat divided over whether or not music-makers have been short-changed in the steaming domain. Some indies that have chosen to pay all artists, including heritage artists, a higher modern royalty rate on streaming would likely agree that the approach taken by other labels is unfair.

However, even those indies that agree there are issues to be addressed around music-maker remuneration are often nervous of – or outright opposed to – the proposed changes to copyright law.

In response to select committee’s inquiry, the government’s Intellectual Property Office commissioned research into those proposed copyright reforms. However, unlike with the data and transparency issues, there hasn’t yet been a formal place where those proposals – and other possible solutions – can be discussed.

When the select committee held an update hearing on streaming late last year, the music-makers made it very clear that they wanted a working group to be convened to allow those discussions to begin.

And in response to that, MPs on the committee stated earlier this year: “We recommend that the IPO continue to build on the current momentum and good-faith engagement by all parties in the process by establishing working groups on remuneration and performer rights to consider the current evidence base and monitor developments in other countries in these areas”.

Ministers have now confirmed that that remuneration working group will be established in a letter to the select committee.

In that letter, minister John Whittingdale notes that artists entering into partnerships with record labels today generally get a better deal – sometimes a much better deal – than in the past. However, he concedes, that doesn’t help heritage artists or session musicians.

“While terms in new contracts are increasingly creator-friendly, those benefits are often not extended to creators still signed to older contracts, many of whom are paid at substantially lower royalty rates than their modern counterparts”, he writes. “Additionally, session musicians feel that they are not sharing equitably in the successes of the streaming sector”.

With that in mind, he goes on: “The government wants to see a thriving music industry that delivers sustained growth in an increasingly competitive global music market alongside fair remuneration for existing and future creators. We believe that these aims are complementary, and that reasonable action can be taken by industry to address creators’ concerns around remuneration”.

Welcoming the news that a remuneration working group is being convened, the recently appointed new Chair of the culture select committee, Caroline Dinenage MP, says: “The creation of a working group we have been calling for is a welcome step towards addressing the frustrations of musicians and songwriters whose pay falls far short of a fair level given their central role in the success of the music streaming industry”.

“The government must now make sure the group is more than a talking shop and leads to concrete change so the talented creators and performers we have in this country are properly rewarded for their creativity”, she adds. “The committee will be keeping a close eye on progress and also looking more widely at artist and creator remuneration to ensure everyone who works in our creative industries can share in its successes”.

The Council Of Music Makers – which brings together the Featured Artists Coalition, Musicians’ Union, Ivors Academy, Music Producers Guild and Music Managers Forum – has also welcomed the new working group.

It says: “Music-maker remuneration is the single biggest issue in streaming. Which is why we have been calling for a working group to be convened to allow the music community to come together to discuss the different ways that we can address these challenges, including the copyright reforms that have been proposed and other possible solutions”.

“We greatly appreciate the government’s positive response to this request and look forward to now getting to work. We will be publishing a new white paper later this week setting out the different elements of the music-maker remuneration debate, building on the five fundamental objectives for streaming reform that we outlined earlier this year”.

“We’d also like to again thank the Culture, Media & Sport Select Committee, whose streaming inquiry and ongoing diligence has ensured that various issues faced by music-makers are now being addressed”.

It concludes: “The working groups on data and transparency, which have been expertly led by the Intellectual Property Office, are set to result in a number of positive changes which, although small steps, are nevertheless important steps towards delivering a transparent, dynamic and equitable streaming business. We hope similar things can now be achieved around remuneration”.

Later this week – in a series of special articles in the CMU Daily – we will be reviewing the UK government-led economics of music streaming work to date and getting perspectives from the various trade organisations that have been involved. Meanwhile you can check all of CMU’s coverage of the economics of streaming inquiry and subsequent initiatives on this special timeline here.