The UK DCMS Committee has released its report on the economics of streaming, with the headline conclusion that “reform is needed in order to make the market fairer”. There is one point in the report however that needs some extra explanation and it’s the UK DCMS Committee’s view that ‘equitable remuneration’ is part of the solution. IMPALA, the European organisation for independent music companies and national associations, argues it is not part of the solution.
The equitable remuneration is a compulsory license that must be paid when recorded music is played on a publicly accessible location. It is a remuneration intended for the public use of the music repertoire of performing artists and music producers. The question of equitable remuneration has already been rejected during the European copyright directive negotiations, with the independent sector backing a range of other reforms in agreement with the artist community. The argument is that equitable remuneration is not a solution as it would not fundamentally shift the needle in a meaningful way and would be damaging for emerging artists.
From IMPALA’s point of view, all artists (and this means indie artists as well) should receive a proper royalty rate along with differentiation by streaming services to reallocate revenues. It’s in this respect crucial to know that independent music companies account for over 80% (!!) of all new releases and this also includes a substantial investment.
You can check IMPALA’s 10-point plan to make streaming fairer below.
- End safe harbours effectively – no new loopholes.
- Pay artists a fair contemporary digital royalty rate.
- Reform allocation of streaming revenue. Different services may wish to explore any or all of the following proposals:
- Differentiation of rates:
- Pro Rata Temporis Model – To deal with the value imbalance for long-form music content, for example by having a rate for the first 30 seconds to 5 minutes of a song, then further payments triggered at 5 minute intervals until 15m 30s.
- Active Engagement Model – Encourage artists to stimulate active fan engagement by attaching a premium value to tracks which the listener has sought out or reached by artist, track or album name, or where she has saved, “liked”, or pre-ordered an album or track, for example.
- Artist Growth Model – Enabling artists to accelerate revenues to a sustainable level thereby supporting a broader diversity of emerging, and credible niche talent. The top tier streams would generate a bit less and bottom ones a bit more to help emerging and niche artists.
- User Choice Model – Facilitate spaces within services for rightsholders to develop incremental revenues through direct relationships with fans, eg by offering access to extra tracks, better audio, and features.
- No threshold for a song to start generating revenue from streaming.
- Differentiation of rates:
- Assure there will be no reductions in royalties in exchange for enhanced plays, or privileged treatment in algorithms, or other features that recreate elements of payola.
- Agree and enable revenue enhancement mechanisms in markets where the services are failing to convert users to paid models.
- More vigilance by music services on unlawful activity that removes value from creators, including streaming manipulation, ad-blocking and stream-ripping software.
- Enable search by labels / performers / producers / composers / musicians / authors / publishers.
- Boost local repertoire and languages by better profiling in playlisting and other features, as well as having track titles in more than one language or specific, and ringfenced funding mechanisms allocated to investment in new, local recordings.
- Work collaboratively with a spectrum of labels, across all markets (e.g. through Merlin for independents) to ensure editorial algorithm developments don’t negatively affect diversity, local repertoire and opportunities for artist discovery.
- Work with the recorded music sector to help assess and reduce the carbon footprint of digital music.