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Can the U.K. Really Make ‘Fair Streaming’ a Reality for Artists?

Amid rising concerns about how streaming pays creators, the United Kingdom is exploring legislation to regulate the music business.

LONDON — Amid controversy over a rule-breaking Christmas party at No. 10 Downing Street during last year’s COVID-19 lockdown, the United Kingdom’s House of Commons still made time on Dec. 3 to debate an issue important to the music business: how to reform streaming to deliver a greater share of revenue to artists, musicians and songwriters.

The proposed statute, the Copyright (Rights and Remuneration of Musicians) Bill, essentially would have required the industry to pay musicians and songwriters a bigger slice of streaming revenue. It failed to win the support it needed to advance to the next stage in the lawmaking process, but the prospect of government intervention in the U.K. music industry remains on the table.

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“We want a fair streaming environment in which the U.K. music industry can thrive and artists are properly rewarded,” said Conservative government minister George Freeman during the debate. Freeman, the parliamentary under secretary in the Department for Business, Energy and Industrial Strategy, warned that the government “has not ruled out legislation” to address imbalances in the streaming economy if the music industry doesn’t reform on its own.

For over a year, the United Kingdom, the world’s second-biggest exporter of music after the United States, has been leading a global charge to deliver fairer terms to creators, with the support of stars like Paul McCartney, The Rolling Stones and Coldplay frontman Chris Martin. In line with the United Kingdom, the Swedish government recently commissioned a report on the music business there, due out in the spring. And Tom Gray — a member of the British rock band Gomez and founder of the #BrokenRecord campaign — tells Billboard that British songwriter advocates have been speaking with artists groups in the United States, France and Germany about launching their own streaming reform movements.

Although U.K. creator groups ignited a debate about several issues, the initial defeat of the copyright bill presented by Kevin Brennan, a member of Parliament from the opposition Labour Party, shows the uphill battle such laws will face. “There is an acceptance that things need to change,” says one senior label executive. “But this is something that the industry needs to sort out. It doesn’t need primary legislation.”

Already, the adoption of the 2019 European Union Copyright Directive in EU member states has mandated greater transparency and reporting obligations for rights holders, as well as the principle of “appropriate and proportionate remuneration” for creators.

“We believe the answers are already there in Europe, as long as the directive is implemented faithfully,” says Helen Smith, executive chair of European independent labels organization IMPALA, which in March published a 10-point plan to reform streaming. Among its proposals is ending safe harbor provisions for digital services like YouTube and labels paying a fair digital royalty rate.

Even without government intervention, industry executives say, royalty rates are rising due to fierce competition among labels for talent, as well as the options available to artists to release music themselves. Royalty rates for traditional U.K. label deals have risen from an average of 15% to 18% in the CD era to around 25% to 30% for new artist deals today, according to U.K. labels trade organization BPI. The country’s Association of Independent Music (AIM) says many indie labels are now paying up to 35% of streaming income to artists or offering 50/50 profit-share deals.

Progress is also being made in addressing some of the problems around CD-era legacy contracts. In June, Sony Music announced it was writing off unrecouped balances for artist contracts signed before 2000, although it is the only major label that has done so. Independent Beggars Group, which is home to 4AD, Matador, Rough Trade, XL Recordings and Young Recordings, also writes off unrecouped debts on advances 15 years after the last record of a contract is released. Last year, BMG pledged to address historic inequalities surrounding its contracts with Black artists.

Gray, who launched his #BrokenRecord campaign in April 2020 shortly after the United Kingdom first went into lockdown, says he intentionally targeted politicians. “I knew the only thing the [major] labels were afraid of was regulation,” he says.

Artist discontent with streaming payments was reinforced by a report by the Digital, Media, Culture and Sport Committee, which concluded after a nine-month probe the global streaming model led by Spotify, Apple Music, YouTube and Amazon Music was “unsustainable” in its current form. The committee also recommended the United Kingdom’s competition enforcer examine how the recorded-music market is “being distorted” by the dominant market share enjoyed by the major labels, Universal Music Group, Sony Music Entertainment and Warner Music Group. In October, the Competition and Markets Authority launched a market study that may last up to 12 months.

The government has also set up working groups with industry stakeholders to research key issues before deciding what, if any, action to take. One area it’s studying is the potential impact of bringing streaming in line with U.K. TV and radio broadcasts by obligating record companies to pay performers “equitable remuneration” on streamed music. For U.K. TV and radio broadcasts, the collecting society PPL collects revenue and pays out 50% to performers and 50% to labels, although it’s hard to make the case that streaming is more akin to a broadcast than a sale.

Industry groups dispute the financial benefits that equitable remuneration would bring to all but the most popular recording acts and warn that it would greatly reduce the amount of money labels will be able to invest in artists. A version of that equitable remuneration proposal that exists in Spain — although it is paid by streaming platforms, not labels — has been mired in litigation since its introduction in 2006. The resulting benefits for artists and performers have been minimal, note label execs, who say collecting society administration fees have risen to as high as 23% as a result.

For small independent labels that already exist on tight margins, the potential loss in streaming revenue could be disastrous. “Equitable remuneration is an analog solution for a digital age,” says AIM CEO Paul Pacifico. “It just doesn’t work for streaming.”

Gomez’s Tom Gray still hopes the success British creators have had getting this issue on the political agenda will lead to further change. The proposed legislation was “a joyful attempt at setting off a firework in the debate,” he says. “It was never the denouement.”

A version of this story will appear in the Dec. 18, 2021 issue of Billboard.