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Musicians’ Union and Ivors Academy call for government intervention to “fix streaming”

By Chris Cooke | Published on Monday 11 May 2020

The UK’s Musicians’ Union and Ivors Academy have joined forces to launch a new campaign under the banner Keep Music Alive which calls on the UK government to “urgently undertake a review of streaming to ensure that the music ecosystem is transparent and fair”. They also demand that all the different strands of the music rights industry come together to discuss how streaming income is shared out each month.

The new campaign follows an increasingly vocal debate online about how artists and songwriters get paid when their music is streamed on services like Spotify and Apple Music. That debate has been ongoing for years, of course, but has come to the fore again in recent weeks as a result of the COVID-19 shutdown and the immediate impact that has had the live income of artists. Songwriters are also affected by the live sector being on hold because they receive royalties – usually a cut of ticket money – when their songs are performed live.

Spotify itself has taken some of the heat in that debate, with some artists, songwriters and fans reckoning that the streaming services – Spotify in particular – simply don’t pay enough to the makers of the music on which their businesses are built. The customary list of per-play royalty rates has also done the rounds again, with many expressing outrage at the tiny amounts paid per stream, and at how many streams are required to make minimum wage.

Although, of course, those per-play royalty rate cards are somewhat misleading, in that there aren’t any per-play rates. Streaming is a revenue share game, with the number of plays of any one track actually irrelevant. What matters is what percentage of overall listening each track accounts for. The same percentage of total revenues is then allocated to the track, and that allocation is then shared with the label or distributor which controls the recording, and the publisher and/or collecting society which represents the song.

Of course, once that process is done you can average things out to identify an approximate per-play rate, but it is always an approximation. The maths is also done on a product by product and country by country basis. So, advertising money is divided among the free streams, subscription money among the premium streams, and separately for each country. Streams on free services and in emerging markets with lower subscription prices will therefore pay out less than streams on premium services and in mature music markets.

However, plenty of those participating in the online debate understand this process, and therefore aren’t just laying into Spotify. Some reckon it’s time for the streaming services to increase their prices, thus meaning there would be more revenue to share. Others argue that, if each individual subscriber’s subscription money was allocated to tracks separately – rather than the allocation process being done on a service-wide basis – then, although the same money would be shared out, it would be shared out more fairly.

Then there’s the big debate on how the money that comes into the music industry from the streaming services is shared out between labels, artists, publishers and songwriters. At the moment, of total income, 50-60% is allocated to the recording and 10-15% to the song.

How much the artist receives depends on the deal with their label or distributor. Though on a classic record deal they would probably receive 20% or less of the recording share. Session musicians get nothing because the ‘equitable remuneration’ principle applied to radio (that assures all performers a cut of the money) has not been applied to streaming.

Plenty of artists and songwriters argue that a higher allocation should go to the song and – of the money that goes to the recording – a higher allocation should go to the artist. The latter could possibly be achieved by applying ER to streams, meaning all artists would be assured a basic minimum share and session musicians would also benefit.

This would mean labels earning less, of course, but – critics of the current model argue – the current model is unfair and mainly came about because it was primarily developed by the streaming services and the labels back in the late 2000s.

Though there has actually been a slight re-slicing of the digital pie as the streaming market has matured. Most labels pay a slightly higher artist royalty on streams compared to discs. And as streaming deals have been renewed, publishers have slightly pushed their share up, while labels have generally taken a concurrent cut. It means that, in percentage terms, songs are often getting more than double their CD share on a stream. But many artists and songwriters argue that these slight changes are not enough.

All of this has been discussed in detail in recent years, of course, via the ‘Dissecting The Digital Dollar’ project from the UK’s Music Managers Forum and CMU Insights.

The most recent stage of that work identified another issue for songwriters. The way songs are licensed and song royalties calculated is incredibly complex, and as a result there are all sorts of reasons why songwriter payments could be delayed, reduced or simply lost as the money flows from the streaming service to the songwriter.

These extra problems are outlined in the ‘Song Royalties Guide’ that was published last year and the MMF is currently digging deeper into these issues. After all, if songwriters do secure a bigger slice of the digital pie but money is still being lost to the overly complex royalty chains, then they may not actually feel the benefit of getting a bigger slice.

Launching the new Keep Music Alive campaign and an accompanying petition this morning, the Ivors Academy and MU stated: “COVID-19 has hit songwriters, musicians and composers hard. Gigs and commissions have been cancelled, festivals and performances postponed, and recording studios closed. This crisis has brought into sharp relief the fact that creators and performers are sustained primarily by income generated by the live side of the music business and that streaming royalties are woefully insufficient”.

The two organisations contrast this state of affairs with the regular announcements from the record industry about how streaming has helped the labels return to growth. There has been a “steady stream of press about profits at the major labels”, they say, while they also cite recent statements from record industry trade group the BPI “on UK label growth powered by streaming, which shows that some are enjoying enormous profits on the back of the work of songwriters, composers and performers”.

They go on: “The Keep Music Alive campaign aims to ‘fix streaming’ and calls for industry stakeholders to come together to agree an equitable, sustainable and transparent model for royalty distribution in the streaming era. As a first step, the two organisations have set up a petition calling on government to urgently undertake a review of streaming to ensure that the music ecosystem is transparent and fair”.

MU Deputy General Secretary Naomi Pohl says: “Musicians should not be so dependent on their income from gigging and music teaching that when it falls away they are literally unable to pay their bills within weeks. The recorded music industry must play its part in shoring up the individuals on whose talent and creativity it so heavily relies. We have been asking for a fairer deal on streaming for years and it is long overdue”.

Meanwhile Ivors Academy Chair Crispin Hunt adds: “Many in and outside the industry are not aware of the plight of most songwriters and composers. If people knew how little of the money they pay for music actually goes to the music creators they would be shocked. Donations are essential at this time because the hardship is real. But why are songwriters and composers being given donations when others make billions on their creativity? We cannot go back to the old, broken industry when the immediate crisis is over. It’s time to create something that works for everyone”.

To participate in the big streaming royalties debate you really need to understand the somewhat complex streaming business model. To help with that, CMU is currently making its CMU Trends ten step guide to digital dollars – usually only available to premium subscribers – available to all for free.

There’s also a newly updated version of the MMF’s ‘Dissecting The Digital Dollar’ book in the works – which covers all the latest developments on safe harbour in Europe, US copyright law and the user-centric royalty distribution debate – and you can sign up for updates on when that is published on the CMU Insights website here.

Or, for those who prefer listening to reading, there’s also a new two-part special edition of CMU’s Setlist podcast that runs through all the key elements of this debate, step by step. Part one is online now, with part two to follow next Monday.