Merck Mercuriadis slams ‘tragedy’ of UK streaming inquiry outcome for songwriters, as record labels applaud industry’s ‘strong progress’ – Music Business Worldwide

In July last year, a cross-parliamentary committee in the UK called for the country’s government to take action on a number of music industry issues regarding streaming payouts.

Within that inquiry report, the MPs called for a “complete reset” of music streaming.

One of the standout recommendations from the DCMS report was that the majors’ dominance of the UK record industry should be referred to the UK’s competition watchdog – the Competitions and Markets Authority (CMA).

The Members of Parliament (MPs) behind the streaming inquiry, undertaken by the Culture, Media & Sport (DCMS) select committee, also called on the British government to introduce a right for artists to earn from ‘equitable remuneration’ on digital platforms.

Introducing an ‘equitable remuneration’ would have seen non-interactive plays of music on platforms like Spotify treated under UK law as ‘rentals’, with 50% of the generated recorded music royalties paid direct to performers via a collection society.

In September 2021, the British government announced that it would be taking no legislative action following the recommendations from the inquiry.

The CMA announced in October 2021 that it intended to launch a study into the music streaming market in the country following the UK government’s response to the report about the economics of streaming.

In January this year, the competition regulator in the UK officially did that, and then in July, the CMA confirmed that it was proposing not to pursue a full-scale investigation into the music streaming industry in the UK.

On Tuesday (November 15) a session was hosted by the DCMS Select Committee to follow up on the findings and progress following those recommendations made as part of last year’s inquiry.

The session saw representatives for music labels and musicians questioned “on whether the ‘reset of streaming’ urged in the Committee’s report is underway”.

Amongst those in attendance at the session were Tom Gray,  Chair at The Ivors Academy; Naomi Pohl, General Secretary at Musicians’ Union, and Geoff Taylor, Chief Executive of the BPI, the trade body representing major and independent labels in the UK.

You can watch the hearing here.

“Artists today enjoy greater success and more choice than ever before, but with 100,000 tracks being uploaded to Spotify each day, the role of the label has never been more important in helping them to realise their creative and commercial potential.”

BPI spokesperson

Following the hearing, a BPI spokesperson said in a statement that: “We were pleased to update the Committee on the strong progress the industry is making.

They added: “Artists today enjoy greater success and more choice than ever before, but with 100,000 tracks being uploaded to Spotify each day, the role of the label has never been more important in helping them to realise their creative and commercial potential.

“Our collective focus must be to grow the streaming economy to the benefit of all, while avoiding policies that would harm the next generation of talent and undermine the UK’s global competitiveness.”

AIM CEO Paul Pacifico, who gave evidence during the initial inquiry, said the following in a statement: “It is good to see the Select Committee maintaining focus on key issues around the streaming debate and driving forward collaborative conversations between stakeholders.

“The industry needs to continue to move closer to agreeing solutions that will improve opportunities for creators whilst not undermining the commercial industry or prejudicing the UK’s place in the global streaming market.”

“It’s a tragedy that the excellent work and the recommendations of the DCMS Select Committee on how to improve the streaming economy for songwriters and artists are being ignored.” 

Merck Mercuriadis, Hipgnosis Song Management 

Merck Mercuriadis, CEO and Founder of Hipgnosis Song Management welcomed the sessions in a statement issued on Wednesday (November 16), but said that  “it’s a tragedy that the excellent work and the recommendations of the DCMS Select Committee on how to improve the streaming economy for songwriters and artists are being ignored.” 

He added: “Yesterday’s hearing showed that a year on virtually no progress has been made to deliver on the  Committee’s recommendations and remarkably the Transparency Working Group operates in  secret, behind closed doors.” 

“The Committee’s July 2021 report asked the Government to refer the major recorded music companies to the CMA and for the competition regulator to investigate market failures, particularly addressing the Committee’s concerns surrounding distortions in the streaming market which result in songwriters not being paid fairly and equitably in the streaming bonanza.

“The Committee’s report identified the problems caused by lack of transparency, the continued  dominance of the market by the major recorded music companies and the resulting adverse impact  this is having on songwriters, meaning songwriters have no say and do not know what or when they will be paid; Non-disclosure agreements (NDAs), which block and deny legitimate information about  payments to songwriters and artists; and perpetual contracts, which never envisaged streaming but  are used to tie songwriters and artists to terms and conditions which are outdated and do not reflect  how the market has changed over the decades. 

Mercuriadis continued: “Whilst in its July 2022 interim report the CMA acknowledges these issues, the CMA has so far failed to address these clear failures. 

“Songwriters and music publishers should be free to negotiate terms that recognise they are delivering  the currency of our industry, the song. As it stands Recorded music companies owning and controlling the major publishing companies results in a distorted streaming economy for songwriters because the  labels are able to dictate that most of the money goes to recorded music where they have the biggest  margin at the expense of the songwriter and artist. 

“I have written to the Committee and I am grateful to the DCMS Select Committee and Sir Julian Knight for not giving up on their demand for better remuneration for musicians and their efforts to fix a broken music streaming system where artists continue to be poorly compensated for the revenue  brought in from music streaming.

“The CMA has the power to redress the distortion in the music streaming economy by mandating, in  their final report, genuine transparency, removing unnecessary NDAs and allowing songwriters and artists on perpetual contracts the right to switch. This will go a long way to deliver a fair share of  streaming revenue for artists and songwriters.” Music Business Worldwide