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UK government committee calls for streaming reform with “optimal rate” for songwriters

The Culture, Media and Sport Committee of MPs has called for streaming reform with an “optimal rate” for songwriters.

  • READ MORE: Streaming – what happens next? Artists demand “a shift in the way business is done”

Today (April 10), the CMS Committee produced a new report on creator renumeration that directly addressed streaming. The inquiry into the economics of streaming has heard evidence from industry professionals over the last six months, including Hipgnosis’ Merck Mercuriadis, MPA CEO Paul Clements and VV Brown and others.

The new report stated: “As new means of consuming creative content have become the norm, creators across the sector have experienced persistent declines in their royalties and residuals.

“Royalties can provide income smoothing, financial certainty, greater career flexibility and support during retirement for those who receive them. Royalties have been depressed by digital distribution in the UK, which pays out less to creators (if at all) compared to other modes of distribution.”

The committee called for “fundamental reform” in the way streaming royalties work and recommends a revenue split between recording and publishing rights. It urged that a consultation should take place to “incentivise an optimal rate for publishing rights in order to fairly remunerate creators for their work”.

Dame Caroline Dinenage MP, chair of the CMS Committee, said: “Many of our talented actors, writers, composers and singers are failing to share in the global success of the UK’s creative industries as the sector struggles to navigate a perfect storm caused by everything from the emergence of AI through to the rapid changes in the way content is consumed.

“If creators are no longer to be the poor relations, the government needs to play catch up by plugging the gaps in outdated copyright and intellectual property regulations and ensuring that there is a champion for the rights of freelancers, who make such a vital contribution to their industries.

“Since the Committee called for a complete reset of the music streaming industry to ensure a fairer split of revenues, there have been moves in the right direction, but the government needs to move further and faster to ensure music makers really are properly rewarded for their work.”

In response to the report’s findings, Dr Jo Twist, CEO of the BPI told NME: “The Committee is right to highlight concerns around generative AI, in particular the alarming rise in the use of copyrighted work without permission or transparency, which is unquestionably the most significant issue facing the creative industries today.

“That said, the report fails to recognise that, with the support of their labels, more UK artists are succeeding in the streaming economy than ever before and that the real challenge facing all of us is how we can enable continued growth so even more creators stand to benefit.  In an increasingly competitive global industry, their approach risks limiting investment and harming the UK talent of the future, when what we need is a supportive regulatory environment in which British recorded music can thrive.

“We’ve engaged fully with the Streaming Inquiry and the ensuing working groups from the start, and we will now actively contribute to the Creator Remuneration Working Group also.”

Spotify – CREDIT: Rafael Henrique/SOPA Images/LightRocket via Getty Images

The subject of music royalties for artists in the age of streaming has been debated in the music industry and beyond now for some time. Back in January, the UK government announced a new Industry Transparency Code on Music Streaming, committed to increasing transparency around streaming practices.

The code was facilitated by the Intellectual Property Office and developed by a series of industry experts. It will come into force from July 31 this year.

Viscount Camrose, the Minister for AI and Intellectual Property, said of the code:  “From The Beatles and The Rolling Stones to Dua Lipa and Little Mix, the UK music scene is the envy of the world. In the last decade, the way that we consume our music has changed markedly, and that’s why we’re taking steps to help ensure artists get the royalties and protections they deserve when their music is played on streaming platforms.

“This pioneering code, designed by the music industry with government backing, has trust at its core. I’m delighted to see the UK leading the charge to ensure our peerless creative minds get the protections they deserve, as the way we listen to our favourite tracks continues to evolve.”

News of the code arrived after the European Union called for changes to the music streaming business, including fairer royalty distributions and increasing payments to artists.

Also in January, the EU adopted a resolution to address the imbalance of revenue allocation in music streaming, including creating a new legal framework for streaming. There are currently no EU rules that apply to the sector.

The proposal follows Spotify’s implementation of a new policy recently that all songs on the platform must now have a minimum of 1,000 streams before they can earn any royalties. The policy changed was slammed by independent artists such as Damon & Naomi, who claimed it would “move an estimated $40-$46 million annually from artists like Damon & Naomi to artists like Ed Sheeran.”

It also comes after the streaming giant raised its prices again in April. Last summer, the streaming platform hiked its subscription prices to £10.99 per month, up from the previous price of £9.99 monthly in the UK. Then in April, Spotify revealed that their subscription will be increasing further to £11.99.

Speaking to City A.M., a Spotify spokesperson said that the subscription price hike was done “so that we can keep innovating and delivering value to fans, the music industry, and creators on our platform, we occasionally update our prices”.

Musicians like James Blake and Nine Inch Nails have spoken out recently about issues with streaming royalties. NIN’s Trent Reznor said the current model has “mortally wounded” many artists while Blake said “musicians should be able to generate income via their music.” Many artists also spoke to NME last year about the urgent need for change in the industry when it comes to streaming royalties. 

In 2021, MPs called for a “complete reset” to address the “pitiful returns” musicians receive from streaming, as laid out in a report from the government’s Economics Of Music Streaming inquiry.

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