Music streaming

The Music Streaming Economy – A Catalyst for Change in All Creative Industries?

The DCMS committee’s investigation into the economics of music streaming was one of the most important events of 2021 for the adjacent music and media industries. Its impacts will be felt through 2022 and beyond, and could lead to some of the most significant legal and business changes that will affect the creative industries in recent years.

The Committee’s recommendations

The Committee’s recommendations are broad – they call for a significant change in the practices of the music streaming industry, including through legislative reform. They understand:

  • change the law provide fair remuneration to performers when a sound recording is made available in digital form (currently equitable remuneration is only available when a sound recording is played in public or broadcast)
  • to supply more transparency for creators, including industry standards for the provision of data by streaming services, and transparency about the conditions of exploitation of their works and how the income paid to them is calculated
  • a market study by the CMA on the economic impact of the domination of the big labels on the market
  • contractual guarantees for creators, including copyright rework after a period of 20 years and contract adjustment for disproportionately low royalties
  • LIKE A regulation of advertising by paid curation of playlists
  • regulation of competition concerns caused by vertical integration and leverage through government proposal pro-competition regime for digital markets, and
  • legal obligations for UGC services to proactively license music content.

UK government and CMA response, and copyright bill (musicians’ rights and remuneration etc) – measures until 2022

The CMA has already announced its intention to launch a market study on music streaming. It is currently expanding its scope with the aim of launching it as soon as possible. The UK government plans to pursue the other recommendations listed above as part of a work program that involves:

  • establish a music industry contact group with high level representatives from across the music industry; the group will meet regularly over the next 12 months to consider issues such as fair compensation, contract transparency and platform accountability rules
  • launch of a research program alongside stakeholder engagement in 2021, with an update in spring 2022
  • establish two technical stakeholder working groups to develop standards and a code of practice for contract transparency and minimum data standards (they will take stock of progress in spring 2022), and
  • consider pushing forward legislation in spring 2022 and again in fall 2022.

In the meantime, a private member’s bill – the copyright bill (rights and remuneration of musicians, etc.) (copyright bill) – has been published, sponsored by MP Kevin Brennan, member of the committee. This aims to implement the Committee’s recommendations concerning fair remuneration, transparency, contract adjustment and the right of withdrawal, with the Copyright Tribunal having jurisdiction over disputes.

The progress and results of these actions are likely to be a key topic for music and other creative industries in 2022.

Wider implications of the recommendations

A number of recommendations, if adopted, are capable of creating significant changes for the creative industries beyond music streaming. An extension of fair remuneration could affect the audiovisual media industries at large and apply to a variety of products, such as audiobooks, podcasts and videos, as well as music streaming. The copyright bill, for example, provides that equitable remuneration applies “[w]here, a performer has transferred his making available right in respect of a sound recording of all or a substantial part of an eligible performance to the producer of the sound recording ‘- this has a broader application than the music only.

The increase in transparency rights for creators and the introduction of contractual guarantees, such as the right to recover works and renegotiate royalties, could have far-reaching consequences in all creative industries. The same applies to any new law relating to the obligations of UGC services in terms of content licensing. It is theoretically possible to limit any new regulations in these areas to music streaming in particular. However, any change made could have wider application (whether intentionally or inadvertently) and / or set a precedent for the change in other industries. The copyright bill seeks to limit the contractual guarantees it introduces so that they apply only to authors of music and words, but the guarantees apply more broadly to performers or artists. performers whose performances appear in sound recordings (that is, whether or not they are musical).

Any legislative change following the recommendations would represent a shift away from the development of copyright laws – in the sense of laws that delineate exclusive rights and exceptions to them – and towards the development of laws that regulate the functioning. content markets. This is reflected in the CMA’s involvement and refers in the recommendations to the government’s proposed pro-competition regime for digital markets.

While copyright, and intellectual property in general, has always been about economics and incentives to some extent, adopting the Committee’s recommendations would represent an important step in the use of legislation. to “fix” media markets that seem to be underperforming.

The same could be said of the DSM directive. It is telling that several of the committee’s recommendations – transparency and contractual guarantees for creators, and obligations for UGC proactive content licensing services – are addressed in the DSM Directive (in Articles 19, 20 and 22, and in Article 17, respectively).

In its response to the recommendations, the government notes that the UK has a unique opportunity to learn from member states that have implemented the directive and will review the approach taken by member states and countries outside the EU. . The results of this analysis and the extent to which the government follows or deviates from the EU’s approach will be interesting to see.

A government decision to legislate in these areas may give rise to parallel regimes. While there are currently discrepancies as the EU has laws in place that do not apply to the UK, navigating similar but not identical regimes can prove more difficult for businesses and individuals active in the two territories.

Next steps

We expect the results of the Committee’s investigation – and the government’s, CMA and Bill’s follow-up actions – to remain a key topic of discourse throughout 2022 and beyond. While those operating in the music industry will be most directly affected, individuals and businesses operating in other creative industries should also closely monitor these developments.

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