A six-month inquiry into music streaming has concluded that royalties should be split 50/50 between artists and record labels. Currently, in the UK, artists receive about 16%.
Streaming accounts for 80% of music sales in the UK. A recent survey by the Musicians’ Union, found that in 2019, 82% of professional musicians made less than £200 from streaming, while 7% made more than £1,000. ‘Streaming’ refers to the delivery method of content, rather than the content itself.
The inquiry by a committee in the UK’s Digital, Culture, Media and Sport (DCMS) department, said that the music industry is weighted against artists, with even successful pop stars seeing “pitiful returns” from streaming.
“While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out,” said Julian Knight, MP, chairman of the committee. “Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.”
Payments from music streaming platforms vary. For example, Spotify pays between £0.002 and £0.0038 per stream, while Apple Music pays about £0.0059. YouTube pays £0.00052 (or 0.05 pence) per stream. That money goes to record companies and those artists who release their own music. The money is then divided up between everyone involved in making the record. In many instances, the recording artist will receive on average 13% of the revenue, with labels and publishers keeping the rest.
At the inquiry, the three major labels – Sony, Universal and Warner Music – were accused of a “lack of clarity” by MPs.They argued that any disruption in the streaming payment model could damage investment in new music. However, representatives from the streaming companies suggested they were “open-minded” about changing the royalty system, but noted that 70% of their income already goes to labels, publishers and artists.
The committee’s report recommended that the UK government pass legislation to give performers the right to equitable remuneration, whereby labels and artists receive an equal share of streaming royalties. The streaming services themselves largely escaped criticism, but MPs said YouTube’s dominance was a cause for concern. YouTube accounts for 51% of music streaming while contributing 7% of music industry revenue.
Geoff Taylor of the British Phonographic Industry (the music industry’s trade association in Great Britain) said: “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.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.”
