A UK Government report following an investigation into the economics of music streaming has recommended a “complete reset” and called for the UK competition watchdog to look into the way major record labels and streaming services operate.
The UK Government’s Department for Digital, Culture, Media & Sport (DCMS) Committee has been investigating the economics of music streaming since October 2020.
“While streaming has brought significant profits to the recorded music industry, the talent behind it — performers, songwriters and composers — are losing out,” said DCMS Committee chair Julian Knight MP. “Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.”
YouTube is criticised, as its business model encourages users rather than artists or record labels to upload content. “Streaming services that host user-generated content (UGC) have significant advantages over other services due to copyright ‘safe harbours’, which has led to the dominance of services like YouTube,” the report reads.
Evidence presented to the committee revealed that YouTube accounts for 51% of music streaming per year but contributed 7% of all revenue. The report says that YouTube excludes musicians who upload content from advertising revenue “until they achieve 1,000 channel subscribers and 4,000 hours of watch time.”
New and established songwriters have been identified as needing more support in order to ensure the long term viability of the business. “Despite being an important part in the music creation and music streaming process, song rightsholders are not effectively remunerated for their work,” the report reads. “The Government should work with creators and the independent publishing sector to explore ways in which new and upcoming songwriters and composers can be supported to have sustainable careers and independent music publishers remain commercially viable.”
The report recommends a “broad yet comprehensive range” of legal measures to protect the rights of musicians and songwriters by classing their work as “rental” and seen in the same manner as radio plays.
The report mentions estimates that streaming services take 30-34% of revenues from a stream, with labels recouping 55% and the rest shared out between the recording artist, publisher and songwriter.
The report continues, “We have been told that the major music companies have experienced historic profit margins, and continue to consolidate their position as the largest asset owners of recording and song rights through mergers, acquisitions, and integration with all aspects of the digital music business.
“Meanwhile, performers, songwriters and composers receive only a small portion of revenue due to poor royalty rates and because of the valuation of song writing and composition, relative to the recording.”
With the massive problems caused by a lack of touring for the last two years, the report highlights concerns about the economics of music streaming and how “the pitiful returns from music streaming impact the entire creative ecosystem” in a way that also exacerbated the COVID-19 situation for creatives.
The report states, “Whilst these issues predate the Covid-19 pandemic, this has been compounded and thrown into sharp relief by the loss of live music, which continues to impact them and the ecosystem that supports them. Poor remuneration risks disincentivising successful, professional musicians and diminishing the UK’s ability to support new domestic talent.”
The report is available to read at here.