Last week, the DCMS Committee released its report on the economics of music streaming and called for a “total reset” of the streaming model.

We take a look at what the report’s recommendations mean for songwriters and music publishers, and how the music publishing community has responded so far.

The findings and recommendations of the DCMS cross-party parliamentary inquiry into the economic of streaming were published on 15th July. It followed multiple sessions earlier in the year in which key figures from across the industry – from artists and labels to industry organisations and DSPs – gave oral evidence. It also drew on written submissions from a range of individuals, campaigners, companies and organisations.

There were a number of significant points that were forefronted in the report, many of them aimed at the recorded side of the business. These major points included:

• a proposal that broadcast-style equitable remuneration be applied to streaming (essentially calling for recorded revenues to be split 50/50 between labels and artists);
• a call for the Competition & Markets Authority in the UK to investigate the market share and business practices of the major labels in an age of hyper-consolidation;
• the option for artists to move to recapture the rights to their work after 20 years, with this specifically applying to recorded music rights in the DCMS report. (“We suggest that the right to recapture should occur after a period of twenty years, which is longer than the periods where many labels write off bad debt but short enough to occur within an artist’s career,” it said. “This would create a more dynamic market for rights and allow successful artists to go to the market to negotiate better terms for their rights.”);
• a bigger share of streaming income to go to songwriters and publishers;
• an exploration of the “practicalities of creating or commissioning a comprehensive musical works database” that would task “the IPO [Intellectual Property Office] with co-ordinating industry work on a registration portal so that rightsholders can provide accurate copyright data to necessary stakeholders easily”.

These final two points are the ones of most interest to us here.

For a full and balanced account of the report, its recommendations overall, its implications and what could happen next in terms of the long road to turn these recommendations into legislation, you can read Stuart Dredge’s definitive and exhaustive (but not exhausting!) analysis for Music Ally here.

The full DCMS report can also be downloaded here.

The immediate responses

The responses to the publication of the findings and assorted recommendations were the classic mixed bag.

The #BrokenRecord campaign was effusive but also realistic that any of this making its way onto the legislation books was a long way off and never a given. “This is not about getting more money for wealthy musicians – that mythology ought to be long dead,” said its organiser, Tom Gray. “This is about preserving a national treasure into the future: our extraordinary, diverse British musical talent.”

Crispin Hunt, chair of The Ivors Academy, saw it as a series of body blows in favour of songwriters. “The true innovators and creators are our musicians and composers, and by acting on the committee’s thoughtful recommendations, the government will do so much good for so many – musicians and listeners alike,” he said.

Hipgnosis founder Merck Mercuriadis concurred. “We are particularly focused on their recommendations that there be a full reset of streaming in law that gives songwriters and artists a fair share of the earnings, and that further to this the government refer the case to the Competition and Markets Authority to undertake a full market study into the economic impact of the major music groups’ dominance,” he said. “This is essential to ensure that the unhealthy control that the major recorded music companies have over streaming negotiations is addressed and to expose the fundamental flaws that exist within the music industry.”

The MPA stepped somewhat gingerly here as they had been singled out in the DCMS report when it said: “[I]t is conspicuous that the MPA refused to give a definitive perspective on the debate, particularly given that the publishing arms of the three major music groups are counted amongst their members.”

MPA chair Roberto Neri said, “Publishers have always advocated for and will continue to fight for the value of the song on behalf of songwriters.” He did, however, choose to single out two other issues rather than discuss those the DCMS wanted the MPA to focus on. “We welcome attention being paid by the government to the distortions created in the digital ecosystem by safe harbours and piracy,” said Neri.

The record labels and their trade bodies were, given the sheer volume of shots fired at them throughout the inquiry, far from pleased and they argued that equitable remuneration would be a recipe for disaster. “[O]ur view is that equitable remuneration will not deliver the outcome they are hoping for,” said Paul Pacifico of AIM. “It is a 20th century solution not fit for the 21st century digital market and will leave the next generation of artists worse off.”

Geoff Taylor, chief executive of the BPI, added, “We will carefully examine the findings of this report, but it is essential that any policy proposals avoid unintended consequences for investment into new talent, and do not imperil this country’s extraordinary global success in music.”

These were the immediate responses as the findings were published. Synchtank also spoke to a number of people around the publishing industry once the dust had settled and they had time to digest the report, its findings and its recommendations.

The wider publishing world responds

John Phelan, the director general of ICMP, zoomed in on the issues in the report relating to safe harbour exemptions and the lower rates that certain services (well, one in particular) currently pay through to rightsholders.

“The irrefutable economic reality is that the single biggest handbrake on streaming valuation for everyone in music is the deprivation of value caused by some of the world’s largest services.”

– John Phelan, ICMP

“The irrefutable economic reality is that the single biggest handbrake on streaming valuation for everyone in music is the deprivation of value caused by some of the world’s largest services,” he said. “YouTube is one of the elephants front and centre in the room. It is unjustifiable that in 2019 they paid less to rightholders than the vinyl industry despite dwarfing usage. Many ‘User Uploaded Content’ services, some of which are the biggest companies on the planet and the largest access points for music, continue to deny their liability for all music, to devalue it and to dodge their data responsibilities, meaning people cannot get paid. This hits artists directly in the pocket.”

Mary Megan Peer, CEO of peermusic, called it a “comprehensive investigation” into the value of song rights. “My hope is that the conclusions in this report are enacted into legislation in a manner which increases compensation for our songwriters and for both featured and non-featured performers while building a more transparent and healthy music ecosystem,” she said. She was, however, keenly aware that recommendations and legislation are not immediately synonymous. “This is a long road,” she said, “but an admirable first step […] We hope that creators stay top of mind through this process and we will continue our best efforts to advance their interests.”

“My hope is that the conclusions in this report are enacted into legislation in a manner which increases compensation for our songwriters and for both featured and non-featured performers while building a more transparent and healthy music ecosystem.”

– Mary Megan Peer, peermusic

Henry Marsden, of label/publisher Bespoke Records and founder of collaborative platform for musicians Creatr, was mostly pleased with the findings, calling them “pretty darn good”. He did, however, sound a note of caution (or at least circumspection), calling them “not perfect, but a thorough and relatively balanced view” on where the market currently is. “It highlights the current winners and losers,” he said, “and suggests evolutions that could be made to rebalance some of the disparities, any of which would be much welcomed by creatives.”

So what happens next?

An inquiry of this nature was always going to unify some parts of the industry as much as it was going to divide other parts.

There was powerful lobbying behind the scenes from all divisions of the music business and this helped shape the types of people and organisations invited by the DCMS to give evidence. There will be escalating levels of lobbying immediately following the publication of the findings – either to try and push through as many of its recommendations as possible (ideally unchanged) that they agree with or to try and cauterise or prune the major ones that they disagree with.

It is, to momentarily lapse into sports coverage clichés, still all to play for.

The bulk of the inquiry was based around the record labels in general and the major labels (and their immense market size) in particular. Their deals with artists were held up to the greatest scrutiny – notably in regard to what they (eventually) pay through to recording artists (should they ever recoup), how reversion of sound recording rights could work and what share of the overall streaming pot they take.

Obviously the parent companies of the major labels all have major publisher arms and the point about possibly bringing in the Competition & Markets Authority to look afresh at corporate market share would not leave the major publishers unscathed were action taken to start to dismantle their consolidated positions.

It is worth returning to the report’s words aimed squarely at the MPA and its refusal to give “a definitive perspective on the debate” because “the publishing arms of the three major music groups are counted amongst their members”. The authors of the report surely regard any breaking up of the major labels’ market dominance as being inherently intertwined with a concurrent breaking up of the major publishers’ market dominance.

The UK government has until 15th September to come up with a response to the different recommendations outlined in the inquiry’s report. Given that the country is still grappling with how to ease (or not ease) lockdown restrictions as well as the ongoing complexities around Brexit, it would not be a huge leap to presume that the government might not give these points its utmost attention.

Of course, the real lobbying from those with assorted vested interests will be moving up quickly through the gears now. Certain parties will be arguing with great conviction that this is the moment to do a hard reboot of the music business as well as many of the (in their eyes) archaic structures it runs on; certain other parties will be gathering more evidence and more arguments to support their thesis that any of these recommendations becoming law would spell disaster for not just their commercial activities but also their investment in new talent.

One does hope it does not descend into utterly polarised thinking and partisan lobbying: do not rock the boat; or move everyone onto a different boat and sink the old boat.

The least controversial recommendation – but perhaps the hardest to implement – is the establishment of the comprehensive musical works database. This all has chilling echoes of the costly and scrapped GRD project that ran aground in 2014 after swallowing up a reported £8 million with nothing to show for it.

The US has something of a head start here with the Mechanical Licensing Collective. It is not without its challenges or its critics, but it is trying to iron out all the problems that derailed efforts here in the past.

The more industry (and government) momentum for this to become a working reality, the better. The UK will be thankful a bigger market is making headway and can offer guidance for how it should move here.

Clamping down on safe harbour exemptions and closing the resulting value gap is something that labels (big and small) and publishers (big and small) – as well as many DSPs (not, obviously, YouTube) – are generally agreed on. But if the different parts of the music industry have to tighten up their lobbying game, they might have to look on in a mixture of awe and horror at just how advanced the giants of Silicon Valley are at this side of politics.

It might turn out to be The Music Business Versus YouTube/Google/Alphabet on this matter, but the lobbying power, political prowess and deep, deep pockets of Big Tech will ensure this is far from a clean and easy process.

That leaves the matter of how recorded music and publishing share (or share out) the spoils of streaming.

The equitable remuneration side of that is something for the labels and recording artists to deal with, but the move in June (just before the DCMS inquiry published its findings) by Sony through its Artists Forward initiative to ignore unrecouped balances and pay through streaming royalties to acts on pre-2000 recording contracts suggests the major was jumping before it was pushed and this will surely force the hand of Warner and Universal. (Side note: Beggars Group pioneered this policy back in 2016.)

Sony followed this up in July with a similar proposal for songwriters on Sony Music Publishing. The company said it will “no longer apply existing unrecouped balances to earnings for eligible songwriters signed prior to the year 2000 who have not received advances since”. Again, this throws down the gauntlet for other major publishers to follow suit.

The publishers will, of course, welcome their share of the streaming economy going up, but it is something the labels will push back against with all their might.

Yet everything is, for now, entirely academic. Changes to the law are tabled all the time and lobbied hard for. But just because they are, it does not follow that they become law.

The DMCS proposals could be kicked into the long grass.

They could be voted down and disappear like a sandcastle in high winds.

A compromise solution could be arrived at that doesn’t anger anyone but equally doesn’t overjoy anyone.

Or the original proposals could be defanged so much they end up looking like Shane MacGowan 10 years ago.

Huge and historic changes are afoot – but just how far they go is still to be fought over.

Found this piece interesting? Why not check out:

• Synchtank Summit Takeaways: Merck Mercuriadis on Rewriting the Rules of the Songs Business
• The Big Clean Up: How Do We Improve Music Rights Data?
• Indie-Fatigable: The Current State of Independent Music Publishing Globally