“Fundamental reform of music streaming” must come soon, say MPs

MPs on the UK Parliament’s Culture, Media & Sport Select Committee have said that they expect to see “tangible steps to improve musicians’ remuneration and performer rights in the next twelve months”. This comes ahead of the first meeting next week of a working group of music industry stakeholders that will discuss creator remuneration in streaming, an initiative first announced last May in response to an earlier request by the same MPs.

The statement comes in a new report from the select committee which looks at creator remuneration across all of the creative industries. “Culture creates meaningful moments in people’s lives, but many creators struggle to make a living”, the new report begins. “Short-term project-based employment, precarious public and private funding, and technological disruption have all contributed to poor rates of remuneration”. 

As a result, it adds, “many skilled, successful professional creators are now holding down multiple jobs, reliant on family support or leaving the profession altogether, which in the long-term may be to the detriment of our creative economy”. 

It's a wide-ranging report which, among other things, looks at the challenges of being freelance, the lack of a private copy levy in the UK and the ongoing debate around the copyright obligations of AI companies. It also considers specific issues faced by musicians and songwriters, citing the committee's earlier inquiry into the economics of music streaming. 

That streaming inquiry prompted a number of government-led initiatives to address issues around transparency and data, as well as the commissioning of research on some of the copyright law reforms that MPs proposed that would change the way artists and songwriters are remunerated. That research will now inform the new creator remuneration working group. 

Welcoming all that work, the CMS Select Committee says in its new report that the government “must now maintain this momentum”, “take stock of the results of the extensive research it has commissioned” and “look at how it can drive fundamental reform of music streaming with a package of measures designed to make streaming work for all”. 

The starting point for the remuneration working group is the argument that artists and songwriters have not fully benefited from the streaming boom and the surging record industry revenues it has generated. 

Record labels counter that artists command higher royalty rates today than in the past, and can also opt to release music in partnership with distributors and get an even bigger share of streaming income. Meanwhile, the commercial challenges artists face are in part the result of the streaming market being so competitive, with unprecedented amounts of music being released, and new music competing head on with decades worth of catalogue. 

The music-maker community doesn't deny any of that, but argues that there is nevertheless a large group of artists whose music is streaming well, but who see a small share of the money generated because they are locked into old record deals that pay lower royalty rates, or they are session musicians who currently earn nothing from streams. The copyright reforms proposed by MPs would give those musicians extra rights to enable them to demand a bigger cut of the revenue their tracks generate. 

Songwriters have also criticised the fact that, of total streaming revenues, up to 55% flow to the record industry, while only 15% flow through to music publishers and songwriters. That's because the starting point with digital music was the CD model, where a single figure percent went to the song. Music publishers and collecting societies have since pushed the rate up, but many writers argue it should still be higher. 

That's something the MPs specifically hone in on in their new report, stating, “The revenue split between recording and publishing rights does not reflect the importance of songwriters, composers and publishers in the music streaming process. We recommend that the government bring forward measures for consultation with fans, music-makers and other stakeholders to incentivise an optimal rate for publishing rights in order to fairly remunerate creators for their work”. 

Responding to the new report, Jo Twist - CEO of record industry trade group BPI - says that MPs "fail to recognise that, with the support of their labels, more UK artists are succeeding in the streaming economy than ever before and that the real challenge facing all of us is how we can enable continued growth so even more creators stand to benefit”. 

It's no secret that most record labels oppose the copyright law reforms MPs have proposed. Alluding to that, Twist continues, “In an increasingly competitive global industry, [the committee's] approach risks limiting investment and harming the UK talent of the future, when what we need is a supportive regulatory environment in which British recorded music can thrive”. 

That said, she concludes, “We’ve engaged fully with the streaming inquiry and the ensuing working groups from the start, and we will now actively contribute to the Creator Remuneration Working Group also”. 

The Council Of Music Makers, which brings together organisations representing artists, musicians, songwriters, studio producers and their managers, says, “We welcome this new report from the Culture, Media & Sport Select Committee, which is timely given that next week the government convened Creator Remuneration Working Group will meet for the first time. It's almost three years since the Committee called for a "complete reset" of streaming, and yet none of the issues around music-maker remuneration have been discussed, let alone addressed”. 

Noting that MPs “expect to see tangible steps to improve musicians’ remuneration and performer rights in the next twelve months”, CMM adds, “For this to happen we need stakeholders from across the music industry to stop denying reality and to, instead, come to the table with solutions, whether that’s the copyright reforms proposed by MPs or a negotiated agreement. We look forward to discussing those proposals next week”. 

Private copy levy

MPs note that UK copyright law - unlike most copyright systems - does not provide a private copy revenue stream for creators. 

In most countries, copyright law includes an exception for private copies, meaning people can make private copies of copyright protected works without getting permission. In return, a levy is charged against media or devices used for copying - in the past blank cassettes, today probably a smart phone or tablet - which flows back to the creative industries through the collective licensing system. 

In 2014, the UK added a private copy exception but without an accompanying levy. That was opposed by the creative industries, but in response the government got rid of the exception rather than introducing the levy. In their report, responding to proposals from various collecting societies, MPs say it is time to give a private copy levy further consideration.

Challenges of freelancers 

The report discusses the high numbers of freelancers working in the creative industries and that many creators work on a freelance basis. Working freelance has both pros and cons, the cons including the loss of employment rights like holiday pay and sick pay, and other benefits an employer might offer like training. In the creative sector in particular, the new report also notes, freelancers are often asked to work for free in return for “promotional value”. 

“Freelancers make up a significant portion of the creative workforce but lack a single clear voice representing their interests to government”, the report states. “This has resulted in a decline in pay and conditions that will cause long-term harm to the sector. We recommend that the government appoint a Freelancers’ Commissioner, with appropriate powers and cross-departmental oversight, to advocate across government in the interests of creative freelancers, and of other freelance and self-employed people more broadly”. 

Copyright and AI

Any report in 2024 needs to mention AI, and this report is no different, reviewing the ongoing dispute over the copyright obligations of AI companies. The copyright industries - including the music industry - insist that any tech company training an AI model with existing content needs to get permission from the relevant copyright owners. Many AI companies disagree. 

The UK government had hoped to agree a code of practice on copyright and AI by bringing together representatives from the creative and AI sectors. A working group was convened, but it failed to agree any kind of code.  

Noting that failure, the MPs write, “Although the government asserted that it could consider legislating were agreement not reached, it has not indicated that it will do so. It is unlikely that simply conducting a further period of engagement with the sectors, with no clarity over its overall aims, will have any meaningful effect. We are concerned that the status quo simply favours AI developers, given creators’ concerns that their IP is already being used in AI development without licence or any practical means of recourse”. 

“The government must ensure that creators have proper mechanisms to enforce their consent and receive fair compensation for use of their work by AI developers”, they continue. “It should set out measurable objectives for the period of engagement with the AI and rightsholders sectors, which it has said ministers will lead on, and provide a definitive deadline at which it will step in with legislation in order to break any deadlock”.