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22 April 2022

A Missed Opportunity to Make Streaming Equitable

By Thomas G. C. Hood, Consultant

Streaming is an ever growing medium for commercially distributing music. However, for years legal professionals and industry professionals have highlighted its flaws for fairly paying musicians. In May 2015, Lauri Rechardt in an article in 2015, then the Director of Licensing and Legal Policy at IFPI, stated that “music right holders are not benefitting fairly or proportionally from the increased use of their music. Restoring balance to the market should be a high priority for the creative industries.” [i] However, change has taken 6 years and a pandemic to appear. A bill was proposed to Parliament aiming to amend the Copyright, Designs, and Patents Act 1988. [ii] The proposed section required streamers to pay artists fairly where they make a track available on their platform. Hayleigh Bosher set out that the act will “introduce an equitable remuneration for performers, where they have transferred their the making available right, concerning a sound recording, to the producer of the sound recording. The right to ER cannot be assigned, except to be administered by a collecting society, or via testamentary disposition.” [iii] Therefore, the benefit predominantly arises where the work has been assigned to another to be distributed. During the course of writing this article, the proposed bill that could have presented an opportunity to address inequality in payments to artists was struck out. However, it is worthwhile outlining the journey, the questions raised, and looking to the future.

In the UK, the industry raised the issue directly to government in a letter asking for a to change the law. The letter, which included several famous signatories including Tom Jones, Yoko Ono, Gary Osborne and The Rolling Stones, wanted streaming to be covered by equitable remuneration. [iv] Streaming makes up a huge amount of music trade revenues. UK Music in their report This is Music 2021 highlighted that over the pandemic, streaming grew to £737 million in 2020, up by 15% from £638 million in 2019. [v] With streaming ever growing, amending the law would recognise the mediums through which contemporary musicians are most likely to earn their incomes. The inquiry report of the Digital, Culture, Media and Sport Committee on the Economics of music streaming recognised a gap in the law where musicians are not paid fairly and equally where their music was being made available compared to other forms of dissemination such as radio. [vi] 

To achieve any shift towards equitable remuneration, streaming will require a new model of calculation for distributing royalties. This is complex, as the making available right allows a member of the public to access a copyrighted work at any place and time. The question is how do you track the activities of users and then attribute money to artists based on these statistics? The UK’s Association Of Independent Music (UK AIM) have proposed an “artist growth model” for distribution of streaming royalties as part of the parliamentary inquiry. Proponents of a new model argue that “there could be industry standard rates and specific contract terms would be irrelevant.” [vii] UK AIM’s approach focuses on what users actually listen to and attributes funds through that data. The model then shifts the distribution of revenue, such that those with the highest stream percentages would make slightly less per stream with those lower down the scale making slightly more per stream. This redistribution of funds received from subscribers of a platform is meant to correct the imbalance of income between successful and more (currently) obscure musicians.

However, models such as this one would only be required if equitable remuneration for streaming became required under the law. The proposed bill did not pass its second reading in the House of Commons. Many anecdotal comments and concerns were made by those disputing the proposals, focusing on the benefits of large labels to the UK economy. Hayleigh Bosher criticised comments of John Whittingdale MP, who even went as far as congratulating the CEO of Universal Music Lucian Grange for earning £150 million, “more than all UK songwriters earned from streaming and sales in 2019.” [viii] She points to ever-growing revenue being accrued through streaming, while copyright owners are left in a position where many feel they are not fairly recognised for their work. Following this debate, the government have promised to publish a formal response; for now musicians have to sit and wait.

In any analysis of equitable remuneration in streaming, a necessary rebalance is recognised.  Without creative rights being remunerated fairly, labels may find in the future they have fewer and fewer musicians to sign, as fewer individuals can afford the financial risk of trying to start a career in music. Labels need these musicians, as they will be the ones to innovate and push the musical world forward. First, these musicians require a fair, equitable level of financial support. Hopefully, that need will be fulfilled in the near future.

[i] https://www.wipo.int/wipo_magazine/en/2015/02/article_0001.html [accessed 18 Nov 2021]

[ii] https://bills.parliament.uk/bills/2901 [accessed 30 Nov 2021]

[iii] https://ipkitten.blogspot.com/2021/11/the-uk-copyright-rights-and.html [accessed 2 Dec 2021]

[iv] https://musiciansunion.org.uk/all-campaigns/it-s-time-to-fix-streaming-and-keep-music-alive/letter-calling-on-pm-to-fix-streaming-now [accessed 30 Nov 2021]

[v] https://www.ukmusic.org/wp-content/uploads/2021/10/This-is-Music-2021-v2.pdf [accessed 18 Nov 2021]

[vi] https://publications.parliament.uk/pa/cm5802/cmselect/cmcumeds/50/5005.htm#_idTextAnchor010 [accessed 30 Nov 2021]

[vii] https://completemusicupdate.com/article/aim-publishes-insights-on-the-artist-growth-model-for-streaming-royalty-distribution/ [accessed 30 Nov 2021]

[viii] https://ipkitten.blogspot.com/2021/12/copyright-rights-and-remuneration-of.html [accessed 30 Dec 2021]