Feb 20, 2024 4 min read

ER report divides industry ahead of first meeting of remuneration working group

As part of its ongoing work on streaming, the UK government has published a report on the possible impact of applying performer equitable remuneration to streams. It’s one proposal for addressing concerns around artist remuneration that will be discussed by a new government-convened working group

ER report divides industry ahead of first meeting of remuneration working group

The UK government has published its report on the potential impact of equitable remuneration being applied to music streams and also announced more information about the creator remuneration working group that is now being convened. 

Representing record labels, the BPI says that the report shows that ER “would significantly impact labels’ ability to invest in new music and future talent”. However, the Council Of Music Makers argues that it “reaches no conclusions, and no decisions should be made on the basis of its ambiguous findings”.

While the new report does not set out to argue in favour or against ER on streaming, it does conclude that "ER does not offer a simple solution" to the issues that have been raised around creator remuneration. And, it states, there is "broad agreement" that applying to streaming the ER model that already operates on the record industry's broadcast income - where 50% of revenue flows directly to performers via the collective licensing system - is "not desirable". 

Ministers Julia Lopez and Jonathan Berry hone in on that point in a letter about the research to Parliament's culture select committee. Applying a broadcast model of ER to streaming "is likely to be extremely disruptive for the music industry with a high likelihood of damaging unintended consequences", they write. To that end "the government does not intend to apply the ‘broadcast model’ of equitable remuneration to on-demand streaming". 

Having some sort of ER system on streaming has been proposed many times over the years, including by the culture select committee in their 2021 report on the economics of music streaming. Such a system would result in a portion of streaming income flowing to performers through their collecting societies, rather than via labels and distributors. That would be most beneficial to artists stuck in old record deals that pay lower royalty rates, and session musicians who currently don't earn anything from streams. 

There are many different ways that ER on streaming could be organised and the 50/50 broadcast model that the government has rejected never seemed likely to be a preferred approach. The report does consider some other approaches too, as well as providing an ‘equitable remuneration calculator’ that can be used for further modelling. 

It's no secret that most labels oppose ER. And UK record label trade group BPI said yesterday that the new report shows "unequivocally that any ER model interventions risk undermining the success of British music and would significantly impact labels’ ability to invest in new music and future talent - weakening their leverage in negotiating rights on behalf of the artists they represent".

BPI boss Jo Twist added that this research, like other studies in the Netherlands and Sweden, show that "any policy intervention would threaten the prospects of British music and would undermine the essential role that labels play in investing in and supporting artists. It risks making our music market much less competitive internationally at a time when our artists and labels already face an unprecedented global challenge". 

Although both major and indie labels generally oppose ER, many indies have acknowledged that there are issues around artist remuneration that negatively impact on some performers. However, they prefer voluntary industry solutions, such as labels committing to pay a modern minimum digital royalty rate to all artists, including those whose recordings are covered by pre-digital record contracts that likely include a lower contractual royalty rate. 

The Council Of Music Makers - which brings together organisations representing artists, musicians, songwriters, studio producers and their managers - has been calling for sometime for those other possible solutions to be formally discussed. Alongside the various different approaches to ER, as well as the other copyright law reforms proposed by the culture select committee, which include reversion and contract adjustment rights. 

It made that call again in response to the ER report. “This report was commissioned by the IPO in 2021 with the intention to facilitate the modelling of various different approaches to ER, and to lay the foundation for future research and discussion”, it said. “It reaches no conclusions, and no decisions should be made on the basis of its ambiguous findings”. 

“We now look forward to digesting the report’s contents”, it added, “and incorporating them into a wider discussion around the ongoing issues regarding music-maker remuneration and the various solutions that have been proposed, which - as well as the various levels of ER - also include reversion rights, contract adjustment, minimum digital royalty rates and royalties for session musicians. The government has convened a working group for this purpose and the CMM will fully engage with that process”. 

The government announced the working group last May but it is yet to meet. However, in their letter to the select committee, Lopez and Berry also state that "the first working group meeting will be held in the coming weeks. Our goal for this working group is to help the music industry to find common ground on the issue of creator remuneration and to support our thriving sector to flourish and continue its success story at home and on the global stage". 

You can access the ER report below.

Equitable Remuneration (ER) in the Streaming Age
The potential economic impact of ER on performers and the music market in the UK.
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