Remuneration of artists from streaming: decisive hearings before the British parliament
The streaming remuneration system is currently under scrutiny of an unprecedented study across the Atlantic. Following the ‘Broken Record’ campaign in the UK last year to denounce the low income of artists from streaming, UK members of parliament took up this issue to examine the economic impact of streaming on artists, producers and, more broadly, the current viability of the music industry.
After hearing representatives of artists at the end of 2020, British parliamentarians have successively auditioned in recent weeks the three “majors” (Sony, Universal, Warner), then independent labels, and finally YouTube and Soundcloud. According to several observers, British members of parliament had, with the testimony of these key players, a unique chance to think about a fairer system of streaming. The points raised during these hearings and, we hope, the decisions which will result from them, will undoubtedly nourish the reflections underway at the Canadian level.
So what came out of these hearings?
HERE IS A SUMMARY OF THE POINTS RAISED :
1- The question of the distribution system of streaming incomes
The first question raised is that of the remuneration of artists: should the income from streaming pass through the Majors and other phonographic producers, as it is often the case, and be distributed under the terms of the agreements they negotiated? Or could these revenues be managed by collecting societies according to a legal model of “equitable remuneration”, in the same way as the revenues from radio, for example, and thus be distributed 50/50 between artists and producers?
According to the Majors, who have unsurprisingly defended the current distribution system, the main issue is whether they want to be able to negotiate with the streaming platforms themselves. This position was also shared by independent labels during their auditions. Indeed, labels do not wish to leave collecting societies the power to negotiate authorizations for them, to allow the use of the music of their artists. But why should collecting societies, used to negotiating such licenses, not be able to negotiate the best remuneration conditions for their artists? A system of remuneration managed collectively, and no longer according to the individual terms of each artist’s contracts, could also provide fairer remuneration conditions, or even greater transparency. The option of an “equitable remuneration” scheme for streaming now appears to be on the table of UK parliamentarians as a solution to consider to improve streaming revenues, and we will be following their findings closely.
2- The dominant position of the Majors in the music market
British parliamentarians also questioned the representatives of the Majors on the dominant position in the music market which they have held for many years. To this question, the Majors replied that artists now have various possibilities to exploit their music: they can, of course, sign with a Major, but also with a multitude of independent producers. In addition, they can decide to exploit their music themselves directly through a distributor and thus benefit from a larger share of the revenue.
3- Sharing the streaming pie and the question of the “User centric” model
If there’s one expression you’ve read a lot in 2020 about streaming, it’s “user centric“. What is it about? It is an alternative method of sharing revenue from streaming platforms, no longer based on the total number of plays at the global level, but based on the artists listened to each month by a listener. Today, all of the subscription income paid by listeners to streaming platforms is brought together in a single pot, to be then divided among the artists (and other associated rights holders) according to their total number of monthly plays on the platform. The “user-centric” system would allow the amount paid by a listener for his subscription (ie the usual $9.99) to be distributed only between the artists listened to monthly by this listener. The listener would therefore pay more directly to the artists he listens to.
If this new form of remuneration seems attractive, it seems difficult to implement in practice and several studies seem to show that the impact of this model would not be enough to resolve income inequalities from streaming. While there is no doubt that this could contribute to a philosophically “fairer” remuneration system, it is not guaranteed that this is actually the silver bullet to better remunerate artists, especially independents.
4- Contracts concluded between artists and Majors
Contracts between artists and Majors are often the subject, rightly or wrongly, of much criticism: low remuneration for artists or lack of transparency in the industry. The hearings of the representatives of the Majors did not teach us much on this point, except that the usual distribution of remuneration is most often 80/20 between labels and artists, and sometimes 50/50. An average remuneration for streaming was however mentioned: a million streams would thus bring in around 5,000 pounds to the Majors, which would amount to paying 1,000 pounds – or more than 1,700 CAD – into the artist’s pockets (with a distribution of 80 / 20%).
5- Responsibility of platforms and the question of the "Value gap"
During the hearing, the Majors ended up passing the buck to the online platforms, most and foremost YouTube which, according to them, would benefit from an obsolete legal exemption regime (the “DMCA’s safe harbor” in the United States or the status of content host in Europe) and which would not remunerate artists and producers enough in relation to the number of broadcasts on their platforms. Indeed, how to justify the disparity between the ever-increasing revenues of these platforms benefiting from the exploitation of online music, and the ever more precarious situation of those who create and perform this music? This is the question of the sharing of value, or “value gap”, which seems to be not the hearth of the problem but an additional issue in addition to those mentioned above.
This last intervention clearly shows that the multiplication of links throughout the streaming remuneration chain allows the various players to mutually transfer responsibility for the inequities and the lack of transparency in connection with this source of income. It also shows that the role of parliamentarians and their power to initiate legal reform, whether to establish an equitable remuneration system or to reform platform liability exemptions, are now crucial to finally allow artists to be remunerated in a fair and transparent manner for the use of their music. It is up to British parliamentarians to seize this unique opportunity which is now within their reach.