The Daily Telegraph - Business
Streaming needs ‘reset’ to pay musicians fairly, say MPs
Performers report living on Universal Credit while record companies profit from payments model
THE economics of music streaming should be “completely reset”, a group of MPs has concluded in a report that could threaten the business models of streaming giants Spotify and Apple Music.
The Competition and Markets Authority (CMA) should step in to investigate a lack of competition in the music industry in an attempt to raise the amount of royalties paid to musicians and songwriters, MPs on the Commons culture select committee said.
They warned that performers and songwriters were struggling to make a living from the low royalties offered by streaming services.
Julian Knight, the committee chairman, said that although streaming has brought significant profits to record companies, performers, songwriters and composers were losing out. “Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do,” he said.
Major changes to the streaming market could upend the economics that have allowed Spotify to become a business worth $50bn (£36bn) and could erode Apple Music’s $4bn annual revenues.
To improve the payouts for musicians, the Government should change the law so that musicians can be paid higher royalties. MPs suggested this could be accomplished by tweaking legislation to define streaming as a broadcast, rather than a performance.
The CMA should also examine the economic impact of the “dominance” of major music labels, MPs said, in the hope that increasing competition would encourage labels to pay artists more for their streams.
Additionally, the Government should commission research into the impact of the algorithms used by services such as Spotify and Apple Music, the report urged, to examine how they affect which songs are streamed.
The report also called on major labels including Universal and Warner to write off unrecouped balances of heritage artists, a decision already taken by Sony Music and Beggars Banquet.
“Streaming has undoubtedly helped save the music industry following two decades of digital piracy but it is clear that what has been saved does not work for everyone,” the report said. “The issues ostensibly created by streaming simply reflect more fundamental, structural problems within the recorded music industry. Streaming needs a complete reset.”
Today’s report follows months of research by the committee, which heard evidence from performers such as Nile Rodgers and songwriter Fiona Bevan who said that many in the industry were “forced to live on Universal Credit”.
Ms Bevan told MPs she earned just £100 from a song that appears on a UK number one album: “Right now, hit songwriters are driving Ubers.”
The committee members cited a study carried out by the Ivors Academy and Musicians’ Union, which found that 91pc of respondents earned less than £200 from their most-played tracks in 2019.
Earlier this year the pair organised an open letter to the Prime Minister, Boris Johnson, calling for reform to the streaming economy signed by stars such as Gary Barlow and Kate Bush.
However, one industry insider expressed concern over calls for a radical shake-up, warning major changes could shrink the industry leading to lower payments to musicians.
Spotify declined to comment.