It’s been a long time coming, but the U.K. Government’s response to the recent report into the economics of music streaming has finally arrived. However, anyone hoping for a neat conclusion to the fierce debate that has pitted labels against artists and songwriters will be disappointed.
Indeed, if this was a soccer match, it would be heading for extra time after an entertaining, high-scoring tie. And both sides will still believe they can ultimately claim victory, even if it might take the music business equivalent of a penalty shoot-out for them to do so.
After a long-running investigation, the Department for Digital, Culture, Media & Sport’s Parliamentary Committee delivered a damning report in July, demanding a “complete reset” of the sector. But, while describing the report as “a key moment for the music industry,” it’s clear that the Government has not yet been persuaded such radical action is necessary — although neither does it rule out taking it at some point in the future.
It has also referred the case for a market study on the economic impact of what the Committee called the “market dominance” of the three major labels to the Competition & Markets Authority (CMA). That sounds dramatic — and indeed is hailed as an acceptance of a key report recommendation by the DCMS Committee statement. But, in fact, the CMA — an independent body — will itself decide whether such a study is necessary. A market study, it should also be noted, would fall some way short of a full market investigation.
“There may be value in a market study,” says the government response, “But it is for the CMA to decide how best to use its resources to deliver its objectives in making markets work well for consumers and businesses.”
With the buck passed on that one, the Government also seemed keen to kick several other recommendations into the long grass. The crucial call for the introduction of a right to equitable digital music remuneration – which would boost artists’ share of earnings, at the expense of labels — was deemed worthy of further investigation, with the Government pledging to “work to better understand issues of fairness in creator and performer remuneration.”
“As part of this work, the Government will assess different models, such as equitable remuneration and the artist growth model, to explore how they are likely to affect different parts of the music industry and how they might be achieved, including through potential legislation,” the response stated. The Government expects to update on progress in the spring of 2022.
Further research will also take place into areas as varied as contract reform; securing a larger share of the pie for songwriters; royalty transparency; industry metadata standards; and the influence of streaming algorithms.
The Government did pledge to look at the lessons from the implementation of the European Copyright Directive – which, thanks to Brexit, does not apply in the U.K. — with a view to looking at possible British legislation along similar lines. That could set alarm bells ringing at YouTube, which has long benefitted from the ‘safe harbor’ rules around user-generated content although, again, any actual legislation would likely be a long way off.
So for now, the only certain action is that the government will shortly publish its “Creators’ Earnings in the Digital Age” research. That takes an in-depth look at how much artists and writers earn from streaming, and the DCMS Committee expects it to “corroborate what artists and musicians told us” about their “pitiful” streaming revenues.
The government will also set up a “music industry contact group,” featuring representatives from across the industry, to further examine the Committee’s recommendations. And it will launch a research program and two technical stakeholder working groups.
Despite the lack of concrete action, the chair of the DCMS Committee, Julian Knight MP, welcomed the response.
“Our inquiry into music streaming exposed fundamental problems within the structure of the music industry itself,” he said. “It is testimony to all those who gave evidence to our inquiry that the Government has acknowledged our report as a ‘key moment’ for the music industry.
“Crucially, Ministers have accepted a key recommendation to refer the dominance of the major music groups to the Competition and Markets Authority,” he added. “Our report laid bare the unassailable position these companies have achieved. We provided evidence of deep concern that their dominance was distorting the market.”
The BPI, however, which represents both major and independent labels, also seemed fairly happy.
“We note the Government’s response that the CMA is an independent regulator and any decision to conduct a market study rests with them,” it said in a statement. “Should the CMA conduct a study, we look forward to detailing labels’ role in supercharging the careers of British talent within a complex and dynamic ecosystem.
“We welcome Government’s recognition of the need for a better understanding of the complexity of the music streaming market and that industry action to address issues of concern is preferable to legislative intervention that may negatively impact performers, jeopardizing the hard won return to growth after years of decline — and harming music creators and UK music’s global competitiveness.
“We look forward to participating actively in further research and industry working groups on transparency and metadata,” it concluded.
But neither are the #FixStreaming and #BrokenRecord campaigns discouraged. While they have yet to officially respond to the government’s statement, Variety sources say campaigners are happy that legislation has not been ruled out, while the call for further research and a possible CMA market study will keep the debate alive, and offer multiple further opportunities to artists and songwriters to get their points across.
In other words, we’re still a long way away from the final whistle. Roll on spring 2022…