What does the DCMS Committee’s streaming inquiry really mean for music makers?

Audio Media International is delighted to present the first in a new series of weekly columns from former Music Week editor and music industry veteran Mark Sutherland. Here, he discusses the Department for Digital, Culture, Media & Sport Committee’s inquiry into music streaming and the impact it could have on music creators…

During the long hard days of lockdown, everybody has been looking for entertainment. And, if you have any interest in music and the music industry, the Department for Digital, Culture, Media & Sport Committee’s inquiry into music streaming has provided more drama than anything you’ll find on Netflix.

But, while the political theatre has been absorbing, some in the biz fear a once-in-a-generation opportunity to reshape the business could be lost amidst the point-scoring and grandstanding. Because, while there’s a broad agreement that some things need to change in order to make sure that artists and songwriters reap more benefit from the explosion in streaming services, there seems to have been little attempt to build a consensus around what a solution might actually look like.

So will the inquiry really change anything? Well, the Committee has no direct powers, but it can make recommendations to government. And with the arguments increasingly polarised – one MP accused Universal Music UK chairman/CEO David Joseph, one of the most artist-friendly execs in the biz, of “living in cloud cuckoo land” when he dared to suggest his artists were happy with the current set-up – it’s looking increasingly likely that the Committee could conclude the market needs some kind of unprecedented government intervention.

How did it come to this? Well, streaming has long been a bone of contention with artists – particularly those who found success in the physical music era only to discover their earnings plunging in the digital age. The COVID-19 pandemic not only weaponised that discontent, as the enforced hiatus from live music forced many artists to contemplate just how little they were earning from streaming, it also redirected it. Whereas before it was the streaming services – particularly market-leader Spotify – that took most of the heat, artists’ anger is now increasingly aimed at the share of revenues they receive from record labels, particularly the majors.

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Indeed, the inquiry itself, which started off pledging to ask “whether the business models used by major streaming platforms are fair to the writers and performers who provide the material”, seems to have shifted focus. By the time the three major label bosses – Joseph, Sony Music’s Jason Iley and Warner Music’s Tony Harlow – appeared before the committee on January 19, oral evidence from artists and songwriters including Nadine Shah, Soweto Kinch and Fiona Bevan had helped change the narrative.

There has also been extensive lobbying by the Ivors Academy’s #FixStreaming and the #BrokenRecord campaign, organised by Gomez singer/guitarist Tom Gray, which has galvanised support for a remodelled industry on social media. That seemed a far-off dream a year ago, but now Gray can sense momentum shifting his way.

“The weight of evidence is pointing in a different direction to the one they initially believed,” says Gray. “You’ve got all manner of different interests saying that the major music groups are problematic to the valuation of their rights. And you’ve got all kinds of organisations saying it can be done differently.”

The two main alternatives to the current payment system that have been suggested to the inquiry are ‘equitable remuneration’, which treats streaming more like broadcast and would split royalties 50/50 between artists and rights-holders; and user-centric payments, which would see users’ subscriptions divided up amongst the artists they actually play, rather than going into a huge pot for pro-rata market share division, a system that favours the biggest artists.

David Joseph even suggested he could be in favour of the latter in his evidence (a revelation ignored by the MPs), although Gray actually wants to see a blended approach, whereby algorithmic and playlist streams are treated like broadcast and elective streams paid out on a user-centric sales/rental basis.

But Geoff Taylor, CEO of labels trade body the BPI, warns that “those who argue that the same revenue should simply be distributed in a different way miss a fundamental point – that if labels see revenues decline, their ability to invest in new music will diminish accordingly – leading to fewer opportunities for new talent and a retreat away from innovation towards a narrower set of genres”.

BPI/BRIT Awards chief executive Geoff Taylor (photo: Mary McCartney)

Labels point out that, while the industry has enjoyed six consecutive years of streaming-fuelled growth, it is still nowhere near the revenues it earned in the CD era (although record companies are notably more profitable nowadays). So should the industry stick or twist? Paul Pacifico, CEO of the Association of Independent Music (AIM) says there is no magic bullet.

“We live in a time when people tend to be looking for simple answers to complex problem,” says Pacifico, who is due to give evidence as the inquiry resumes today (February 4). “The first thing we have to do is understand whether the status quo is more or less problematic than other ideas on the table. You’re never going to have a perfect market, and there’s a danger here that we go somewhere worse…”

A future evidence session with streaming services could yet change everything, of course, with the issue of why they still only charge £9.99-per-month for a subscription, more than a decade after Spotify launched, sure to be on the agenda (with inflation, it should be £13.72 by now). Those who argue the public would refuse to pay more might consider the success of Bandcamp during the pandemic. Aware that the sales-based platform takes just 10-15% of revenues, Bandcamp COO Josh Kim tells AMI that 2.5 million fans bought $145 million worth of music and merch between March and the end of 2020.

“The whole music community is re-thinking how to go about supporting artists, and we’ve always believed the best way to do that is to support artists directly,” says Kim. “We only make money when artists make a lot more money, so we’re always looking for ways to maximise artist support. And this artist-first business model works: we’ve built a large, sustainable and profitable business that serves hundreds of thousands of artists and millions of fans.”

Then again, the current major label system clearly also works for many artists. Which is why it’s so strange the committee hasn’t called any truly streaming-friendly artists to give evidence.

For what it’s worth, when I asked Dua Lipa – the UK’s most-streamed artist on Spotify in 2020 – about it last year, she had notably fewer complaints, noting that, “Streaming has given a massive opportunity to so many artists all over the world to have their music heard” – although she did stress that songwriters, a key element of mainstream pop success, deserve a bigger cut.

Broken Record campaigner Tom Gray (photo: Claire Gray)

So will the inquiry actually result in artists and songwriters receiving a larger slice of the streaming pie, or at least Gray’s vision of “an expanded professional class of musician”? And do we really trust the government to do the best thing for artists and industry alike after the mess they’ve made of post-Brexit touring plans?

Traditionally, the music business sorts such matters out in-house. The obvious forum would be umbrella trade body UK Music – where many of the opposing factions already sit around the same table – although, the usually vocal trade body is keeping a notably low profile amidst an increasingly toxic debate.

Still, Taylor is adamant there is no need for the government to get involved.

“Industry solutions are generally preferable, and we and our members are always willing to engage in evidence-based discussions between industry bodies,” he says. “Regulation should only be appropriate where there is clear and objective evidence of market failure.”

“We as an industry need to find our better selves,” says Pacifico. “We tend to fall foul of not letting the facts stand in the way of a good story and that is something we can ill afford at this point.”

And, significantly, Tom Gray – even though he’s convinced the Committee will ultimately report “that there is something very dysfunctional happening in this marketplace” – is up for negotiations.

“From the very start I’ve said I want to get everybody around the table and come to a conclusion – even if I have to not be there because I’ve pissed everybody off,” he chuckles. “But I knew nothing was going to change unless we went the legislative route. Because the one thing nobody wants is a legislative or regulatory solution, therefore it is the perfect stick to drive this industry to sort its face out. But whether we get this now or not, we have changed the conversation.”

Of course, it may already be too late for the music industry to control its own destiny – or the DCMS might yet conclude that there is no action needed. But, whatever the eventual outcome, one thing is clear: the artists’ rights genie is well and truly out of the bottle and this is one lockdown drama that will run and run…

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