DCMS Committee Report recommends severe regulation of music majors

Days of tough questioning of people from all sides of the music industry showed the major record labels as having treated the terms of recording contracts very loosely to give them record profits while musician income collapsed.

This included paying royalties on streaming as though they were sales of physical records, even though a stream is a one-off play and there are no costs for pressing, packaging or distribution. In addition, musicians argued that by retaining ‘ownership’ of copyright and paying off advances solely from the artists’ share of income, many thousands of musicians remained in arrears long after the record companies had been reaping profits.

The report said that this problem had been there long before the pandemic, but the ending of live performance income through lockdown had brought the plight of musicians and composers to the fore.

In its conclusion, the report said, ‘In order to address artist remuneration and the disparity in power between creators and companies, we recommend that the Government introduce a right to equitable digital music remuneration, a right to recapture the rights to works after a period of time and the right to contract adjustment if their works are successful beyond the remuneration they receive.’

At the beginning of the enquiry, many expected the streaming companies to take the flak, and there was clearly vast room for improvement, according to the committee. In particular, it accused them of being too relaxed about copyright control and the abuse by their subscribers of others’ intellectual property.

It said, ‘We also advise the Government to proactively normalise the requirements on streaming services both within the streaming market and with other modes of music consumption, by placing greater licensing obligations on UGC-hosting services, future-proofing the public service broadcasting prominence regime and addressing ‘payola’ concerns about algorithms and playlist curators.’

Profits are soaring, margins are better than ever… but performers and songwriters are being left well behind

Musicians’ groups were ecstatic in their reaction to the report. Tom Gray of the band Gomez has fought unfairness in the industry for years with his Broken Record Campaign. He spoke eloquently during the committee and his response to the report was effusive.

‘The report brilliantly and coherently cuts to the chase: the music industry has a serious problem,’ he said in a statement. ‘Profits are soaring, margins are better than ever, the value of the once piracy-blighted industry is forecast to eclipse anything seen in our lifetimes within a decade, but performers and songwriters are being left well behind.’

‘As we’ve repeated, rather like a broken record, it’s a failing market where corporations have little incentive to share their extraordinary profits with the architects of their success, musicians.’

‘This goes to show that when artists come together and speak honestly about our experiences and those of our peers, our politicians can easily surmise the reality – the public too. This is not about getting more money for wealthy musicians, that mythology ought to be long dead. This is about preserving a national treasure into the future: our extraordinary, diverse British musical talent.’

If we want to preserve our cultural heritage, bring opportunity to all four corners of the UK and keep musical talent in Britain, we’ve got to fix streaming and stop exporting millions of pounds to huge record labels

Horace Trubridge, general secretary of the Musicians’ Union, agreed. ‘As we all emerge from the horrors of the pandemic, the government’s levelling up agenda is more important than ever,’ he said. ‘Our industry has been on its knees and if we want to preserve our cultural heritage, bring opportunity to all four corners of the UK and keep musical talent in Britain, we’ve got to fix streaming and stop exporting millions of pounds to huge record labels and their owners overseas.

‘This cross-party report is revolutionary. It grasps the issue, identifies the problems and recommends achievable and practical solutions, which won’t cost the taxpayer a penny.

‘It’s time to make the most of this rare, cross-party consensus, bring British copyright law up to date, show Global Britain leading the fight to protect the intellectual property of artists and creators, and make the UK the best place to be a musician.”

The Incorporate Society of Musicians’ Chief Executive, Deborah Annetts, added her support for the findings.

For too long the musicians who create the music we all enjoy have been left without their fair share

‘This report makes for essential reading in the music industry and now musicians need the Government to look closely at its recommendations and make changes that improve their careers.

‘For too long the musicians who create the music we all enjoy have been left without their fair share. A sustainable music industry must have fair remuneration and our members will be delighted to know that the policy is gaining support in Westminster, which our submission to the report called for.

‘The committee has investigated all parts of the complicated music ecosystem, while there are no quick fixes, they highlight that too often the cards are stacked against the creator, which is an imbalance that must be addressed.

‘We thank the Committee for their comprehensive work in producing this report, it is an important first step which will hopefully lead to an improved situation for musicians.’

Not surprisingly, the record industry’s association, the BPI, was not so enthusiastic. Its chief executive, Geoff Taylor, was less than happy.

The government also needs to consider the vital role that labels play

‘The UK’s global success in music is driven by label investment in new artists, creating music that is loved around the world and contributing more than £1.5 billion a year to the UK economy. Streaming is enabling more artists than ever, from all genres, to earn a long-term income: more than 2,000 artists will achieve 10 million streams this year in the UK alone, double the number who sold the equivalent number of CDs and downloads in 2007.

‘When considering this report, the government also needs to consider the vital role that labels play as the leading investors into artists’ careers, with investment in artists by record labels growing year-on-year. Artists also now have more choice in how to manage their careers, with independent and self-releasing artists growing their share of the market.

‘Labels are committed to ensuring that artists share fairly in the growth from streaming. We will carefully examine the findings of this report, but it is essential that any policy proposals avoid unintended consequences for investment into new talent, and do not imperil this country’s extraordinary global success in music.’

We have deep concerns about the position of the major music companies and call on the Government to take advice as to whether competition in the recorded music market is being distorted

The report also supported the claims of smaller independent labels and publishers, who have not been able to strike the advantageous deals with streaming companies that the major labels have.

‘We have deep concerns about the position of the major music companies and call on the Government to support the independent sector and take advice from the Competition and Markets Authority as to whether competition in the recorded music market is being distorted,’ it stated.

But the independent music companies’ association, IMPALA, disagreed that the idea of ‘equitable remuneration on streaming royalties would work.

IMPALA’s Executive Chair Helen Smith argued that while… ‘We support reform of streaming and we recently set out concrete ways of doing that in our 10-point plan to make streaming fairer. IMPALA cannot support equitable remuneration on streaming as we believe it is not in fact equitable. Our assessment is that it would be damaging for diversity and emerging artists.’

Her words were echoed by Paul Pacifico, Chief Executive of the Association of Independent Music, which represents small labels, publishers, managers and more. He argued that equitable remuneration was, ‘a 20th Century solution not fit for the digital 21st Century, though the report suggested the current system was fit for neither.

The only voice of note that remains absent at time of publication is that of Jamie Njoku-Goodwin, Chief Executive of UK Music, the usually united body of musicians and music companies. A former advisor to Downing Street, he now finds himself caught between the BPI, who fund much of UK Music, and the musicians’ and composers’ various unions, royalty collection agencies and associations, who are also members. His response will be very interesting.

The debate about the contents of the report will continue to run until the Secretary of State for DCMS responds. Reports such as this are an important part of the Parliamentary process but are by no means decisive.

Read the full report here