The Department for Digital, Culture, Media and Sport (DCMS) has found the need for an overhaul of music streaming in order to protect artists. Learn more on their findings here.
The inquiry, which began in October 2020 and took evidence from musicians including Nile Rodgers, has investigated the unevenly weighted commercial power held by major labels. It’s been a long debated issue; the disproportionate amount of revenue generated by music streaming going to artists. Earlier this year, SoundCloud proposed a “fan-powered” royalties system, which would see artists earning a fairer share of royalties directly from users listening to their music. However, it has been found that a much more dramatic change is needed in order for streaming to be a more viable earner for musicians.
Music streaming has experienced huge growth in recent years, generating £600m in revenue each year. Spotify accounts for a whopping 44% of revenue generated from streaming, with 25% each for Amazon and Apple Music. However, the report by the DCMS states that 30-34% of revenues goes to streaming services, labels take 55%, and the rest is left for publishers, performers and songwriters.
This paltry amount has caused deep concerns among MPs. A call on the UK government has been made to appeal to the Competition and Markets Authority. They have asked the organisation to investigate whether competition in the recorded music market is being distorted. They say playlisting is unevenly weighted in favour of Sony, Universal and Warner Music against independent labels and artists.
Recommendations made by the report include a number of legislative measures to protect the rights of artist and musicians. Also, it suggests streams should be treated similarly to radio plays, with a collecting society recouping royalties on behalf of artists. The report deems this a “simple yet effective solution.” However, this feeling is unsurprisingly not shared by the major labels.
For a long time, major labels have argued that the current system works. They’ve previously stated that changes such as these could be damaging and actually lead to reduced revenues.
Despite this, the report by the DCMS has raised the point that the effects of Covid-19 makes the need for a “complete reset” even more pressing. Artists have become reliant on touring and live performances as a source of revenue. With opportunities for this now massively limited, streaming has been given a heavier focus.
YouTube received criticism within the report. With YouTube music being the fastest growing subscription based streaming service this year, YouTube’s contribution towards streaming revenue is pitifully small. YouTube accounts for 51% of music streaming per year, yet only contributes 7% towards revenue. The system in place for artists to earn money from uploading their music also creates barriers. Uploaders must have 1000 subscribers and 4000 hours of watch time in a 12-month period in order to be eligible. The DMCS report puts it that this model has “suppressed the value of the digital music market.”
This inquiry will be welcomed by artists and musicians, both independent and mainstream. However, it remains to be seen whether enough weight will be thrown behind these calls for change to actually affect a reform.