Music streaming needs a ‘complete reset’, according to a damning parliamentary report which calls on Britain’s competition watchdog to investigate the market power wielded by major record labels.
The Department for Digital, Culture, Media and Sport (DCMS) committee investigation, which began in October 2020 and collected testimony from musicians, including Nile Rodgers, reported that unless artists don’t receive a bigger share of revenue, the UK music landscape could be transformed within a decade.
Committee chairman Julian Knight said that while streaming has “brought significant benefits to the recorded music industry, the talent behind it – performers, songwriters and composers – is losing out”.
The report states: “The pitiful returns to music streaming are impacting the entire creative ecosystem. Successful and critically acclaimed professional performers are seeing meager returns from the dominant mode of music consumption. Unfeatured artists are completely excluded, impacting what should be a viable career in its own right, as well as a critical pipeline for new talent.
Record labels and streaming sites come under fire in the report, which says that while streaming has undoubtedly helped save the music industry after two decades of digital piracy, the companies have “exploited structural advantages to achieve seemingly unassailable positions” in their markets.
The report refers to estimates that streaming services get 30-34% of a stream’s revenue, with the label getting 55% and the rest split between the artist, publisher and songwriter.
MPs say they are “deeply concerned about the position of major music companies” and call on the government to ask the Competition and Markets Authority to investigate whether competition in the recorded music market is distorted. They say the big labels: Sony, Universal and Warner Music, profit at the expense of independent labels and self-released artists when it comes to playlisting.
“The problems seemingly created by streaming simply reflect more fundamental structural problems within the recorded music industry,” the report said. “Streaming needs a complete reset.”
The committee recommends ‘a broad but comprehensive range’ of legislative reforms to protect the rights of musicians and songwriters, who it says are getting poor returns from streaming – an industry that generates £600million in revenue a year .
The 121-page report backs calls for artists to receive fair compensation from streams, which would mean their work is classed as ‘rental’ when streamed on platforms such as Spotify, which owns 44% of market share against 25% each. for Amazon Music and Apple Music.
The measure would mean that streams are treated the same as radio plays, with a collecting society collecting royalties on behalf of an artist. The committee says the change would be a “simple but effective solution” to the problems caused by the low remuneration of music streaming.
It also recommends introducing a right of recovery of rights to works after a certain time and a right of contractual adjustment if an artist’s works are “successful beyond the remuneration he receives”.
The suggestion of sweeping legal changes is at odds with the position of the streaming sites and the three major labels, which have always maintained that the current system works and that fair compensation would be, in the words of Geoff Taylor of the BPI, ” a recipe for disaster”. ” and lead to a drop in income.
Recorded music revenues are still much lower in real terms than they were two decades ago, the report says, but have increased since 2014, when the percentage of the UK population illegally downloading music was 13. %, before falling to 5% in 2020.
Will Page, former chief economist at Spotify, presented evidence indicating that between 2015 and 2019, the streaming-led recovery increased the turnover of major UK record labels by 21%. “The recorded music business has not only become bigger, but also much more profitable for record companies. Artists, however, did not receive a commensurate benefit,” he wrote.
MPs criticize the hostility that potential contributors to the survey have faced within the music industry, pointing out that they received 80 confidential submissions because people were afraid to speak out publicly.
The impact of Covid-19 is also at the center of the report, with MPs finding that streaming problems have been exacerbated because “musicians have become too dependent on touring and live music income”.
YouTube comes under particular criticism in the report, due to its distinct business model. Unlike the majority of UK streaming platforms, much of the content on YouTube is uploaded by users rather than artists or record labels.
The platform licensed some content and proactively removed many unlicensed downloads using its content identification system, but the different approach plays into its bottom line. According to survey evidence, YouTube accounts for 51% of music streaming per year, but contributed 7% of all revenue.
If musicians upload their own music directly to YouTube, the platform’s policies explicitly bar them from receiving a share of ad revenue “until they reach 1,000 channel subscribers and 4,000 hours of watch time.” .
As a result, the report calls on the UK to designate YouTube’s streaming service as having “strategic market status”, and warns that the continued absence of lawsuits that YouTube benefits from through its user-generated model” removed the value of the digital music market”.