Something monumentally huge is brewing in the UK music industry right now and it has the potential to bring about a shift in the balance of power so seismic it could change the way the whole industry functions.
Those changes are twofold and they revolve around 1) the size of three majors, Universal Music, Sony Music, and Warner Music, and 2) the way streaming services remunerate artists.
Back in January, a cross-party UK Parliamentary inquiry into the Economics of Music Streaming was held in which a series of UK politicians took turns to question and critique the market’s major record company bosses live on camera.
Off the back of that inquiry, a report has now been published that pulls together the committee’s findings and makes some groundbreaking recommendations for the government to put into place in the industry.
The first recommendation called for the Competition and Markets Authority (CMA) to investigate the marketshare held by the Universal Music, Sony Music, and Warner Music.
The second recommendation centres on what is known as the right of ‘equitable remuneration’ (ER). If put into action, it would mean that music streams on services like Spotify would be treated under UK law as ‘rentals’ rather than sales. This would automatically entitle the artist to 50% of the generated recorded music royalties via a collection society.
The British Phonographic Industry (BPI), which represents major record companies in the UK, has described ER as “a recipe for disaster” that would “dramatically shrink the total pool of royalties available to labels and artists”.
However, Julian Knight, MP, who chairs parliament’s Digital, Culture, Media and Sport (DCMS) committee, commented: “While streaming has brought significant profits to the recorded music industry, the talent behind it—performers, songwriters and composers—are losing out. Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.”
Musician Tom Gray, whose #BrokenRecord campaign played an integral role in kickstarting the inquiry in the first place, said: “It feels like a massive vindication. They’ve really come to the same conclusions that we’ve been saying for a very long time.”
Other recommendations included:
- The option for musicians and songwriters to reclaim the rights to their work from labels after a certain period of time
- The right for artists to adjust their contract if they feel the success of their work outweighs the money they earned
- Playlists on platforms like Spotify and Apple Music should adhere to a ‘code of conduct’ to outlaw bribes and favouritism (similar to current ‘payola’ legislation
- Publishers and royalty societies should be encouraged by the government to inform artists about how earnings from their work are divided up and distributed
- Warner and Universal Music should follow Sony’s example, and cancel their artists’ historical debts.
As for what this means for the future, that’s difficult to say. While it’s encouraging that MPs recognise the inequities in the music industry, it’s all dependent on the government’s response. Previous DCMS Committee inquiries have required a government response, but not all do. For now, we wait, but it’s the most encouraging news artists have had in years.
