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Tide change on music streaming? UK parliamentary report calls for “equitable remuneration” for performers

After the war against internet piracy in the 00s, the rise of Spotify and other streaming platforms in the 2010s appeared to offer a viable solution to an industry struggling to come to terms with the demise of CDs and a shift to online music consumption. It is fair to say that – from the record labels’ perspective – it has been a fix, with the years 2015 to 2019 seeing a return to profitability and a turnover increase of 21%. However, as the recent Ivors Academy of Music Creators’ #BrokenRecord Campaign has highlighted, there has been growing discontent amongst songwriters, composers and performers, who feel that revenues from the streaming boom have not fairly trickled down to them.

The plight of musicians, and particularly performers, has been thrown into sharp relief by the pandemic, when alternative revenue streams, such as live gigs, have fallen away. It is against this background that the House of Commons Digital, Culture, Media and Sport (DCMS) Committee conducted an investigation into the economics of music streaming. July’s report is comprehensive and contains wide-ranging recommendations for a “complete reset” of the industry. Perhaps the most eye-catching of the Committee’s recommendations is that the Copyright Designs and Patents Act 1988 (CDPA) be amended to grant a guaranteed right of “equitable remuneration” to performers in the case of streaming.

It is performers (i.e. the musicians who play or sing on recordings) who are perceived to lose out the most from our preference for streaming. Unlike songwriters or composers (who own copyright in the words or music in a song) or record companies (who invariably own the copyright in the sound recording itself) performers do not own such primary copyrights. In the past, and in recognition of their weakened position, the CDPA (and subsequent regulations) granted them “performer rights” allowing them to control the use of their work. These rights were supplemented by certain exclusive economic rights, including a non-waivable and non-assignable “right to equitable remuneration” where a “commercially published sound recording” is “played in public” or “communicated to the public” (e.g. broadcast on radio or played at a public event).

An exception to this right of compensation is where the communication is “made available to the public in the way mentioned in section 182CA(1)”. Unhappily for performers in the UK, the “way” specified in 182CA(1) (namely: “making available to the public…by electronic transmission in such a way that members of the public may access the recording from a place and at a time individually chosen by them”) is the closest that the CDPA comes to a definition of streaming, and has been adopted as such by the music industry.

The “making available” definition was originally devised to ensure copyright applied to the various Peer-2-Peer network and on-demand services which sprung up in the 90s and 00s. The UK legislators’ rationale for excluding “making available” from equitable remuneration was to give performers control, so that they could agree remuneration directly with record labels. In practice, however, and perhaps unsurprisingly, the bargaining power of performers in this negotiation turned out to be limited. The consensus is that they have lost out from the absence of statue-guaranteed compensation (which industry norms suggest is generally around a 50:50 split where it does apply). Recording agreements are typically structured in a way that means performers are paid a much lower royalty than 50%, and only receive a royalty share once the record label has recouped all its costs.

It is perhaps for this reason that one of the key demands of the #BrokenRecord Campaign has been to expand the scope of equitable remuneration so that it does cover the “making available” right. The DCMS Committee has clearly seen the logic to this approach, as this very call forms one of the key recommendations of the report with an invitation to the UK Government to legislate accordingly.

The suggestion that UK copyright law should be amended in this way has understandably faced opposition from record labels. As stated in evidence from representatives to the Committee, streaming offers the user choice about what tracks they listen to and when, and is therefore most akin to an on-demand service. In turn, label representatives contend that this pushes streaming closer to a traditional sale than a broadcast or rental. This comparative logic is undoubtedly helpful to their businesses as the payment terms and royalty splits in recording contracts have historically found justification in the significant up-front costs that are required to produce music and on-demand services, and which should therefore be recouped if the creative arts industries are to continue to flourish.

It is, however, questionable whether these arguments hold water in the age of streaming. The DCMS considered that they “failed to consider the complexities of streaming that sets it apart from other modes of consumption”. The reality is that the costs associated with the production and global distribution of CDs (or other physical media), or even on-demand services, do not figure as part of today’s music business; instead, a record company need do little more than upload the music file to the streaming service in order to exploit the song to something approaching its full commercial potential.

The DCMS report regards its recommendation as a “simple yet effective solution to the problems caused by poor remuneration from music streaming…and has been applied elsewhere in the world”. Whilst the solution may sound appealingly simple, and precedents do exist elsewhere in the world (such as in Spain), these are in a minority. The right of fair compensation for performers was first provided for in the 2001 EU information Society Directive; but of the EU member states only Spain implemented it in the case of streaming. Under the Spanish model, the compensation right is granted in exchange for the performer relinquishing the exclusive right of control that performers in the UK currently retain (albeit to dubious practical effect); the remuneration is negotiated and collected by collecting societies in Spain, such as the AIE. In the AIE’s evidence to the Committee, it suggested that the model worked well, and had not necessitated any changes to recording contracts.

The UK Government has been historically slow to act in this area, only taking action once a particular approach becomes orthodoxy elsewhere. With this in mind, and where the continued subsidence of the pandemic should enable live music to return and related revenues to plug any gap, the urgency of calls for reform may also abate. That said, there are clearly fundamental issues to answer, and if the UK wishes to retain its reputation as a hub of music creativity with the attendant economic benefits for the country, the reality is that music performance needs to offer a viable career path.

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