Written evidence submitted by The Ivors Academy
Thank you again for holding this important inquiry into the economics of streaming. There are many failings in the current system of remuneration which impact music creators which have been laid bare by the Covid-19 epidemic. We are greatly appreciating the time, scrutiny and diligence that the DCMS Select Committee is giving to understanding and evaluating the differing perspectives on these important issues.
Following the initial oral evidence sessions which have given creators and industry representatives the opportunity to speak, we look forward to the forthcoming sessions which will hear from the UK Collecting Societies and representatives of the three major music labels. We note that no representatives from music publishing, nor the independent sector have been called yet and hope their important perspectives will be heard.
While we would welcome the opportunity to answer any questions the Committee might have on our submissions and recommendations via oral hearing or roundtable session, I would like to highlight again our position in advance of the forthcoming sessions:
The need for Regulation of Major Music Intermediaries
- Regulation of Major Music Intermediaries would ensure adherence to minimum standards of disclosure on interests, policies, payments, and inkind benefits, including auditing rights for groups of creators. Standardising regulation of the industry in these areas would restore trust and stability to the industry for creators and consumers. This should be a benefit for labels, publishers and collecting societies.
- Many of the current practices and behaviour of the Major Music Groups would not be tolerated in other industries subject to regulatory oversight. A Code of Conduct with Ombudsman overseeing minimum standards of transparency should be embraced by the industry. The industry should have nothing to fear from such as requirement. Further, if labels and publishers do have formal separation within Major Music Groups, then there should be little resistance to this having oversight.
- Where there are financial benefits for Major Music Groups to maintain a higher valuation of label rights in deals with DSP’s over publishing rights, it is wrong for Major Music Groups to operate without scrutiny or be compelled for these interests to be broken up. Suppression of the value of the song is hurting the ability for songwriters to sustain a living.
- The arguments that labels require such a high proportion of streaming royalties to fund A&R and risk are no longer valid. Label and publishing values are generally equivalent for broadcasting. This provides a much better model for streaming than the proportions based on the old physical sales model.
- The Major Music Groups seek to reinforce the ‘sale’ model of streaming because it maximises profits rather than is justified because of activities and costs. This is evidenced by the financial reports from the labels/major music groups. Those publishers and creators who are not subject to the label/publishing conflicts of interests are unable to value their publishing rights at a fair market value because of the concentration of power held by the three Major Music Groups.
- The concentration of power by the Major Music Groups across recordings and publishing, the lack of regulation and control of these groups and their presence on the Boards of Collecting Societies would benefit from a fuller investigation.
The need for Copyright Reform
- UK creators need law makers to provide a strong environment for copyright, because this is the basis for fair remuneration of intervention and work undertaken. If the UK Music Industry is to continue to be a source of UK net exports and national pride, our creators must not operate at a disadvantage.
- If UK music creators fall behind the rest of the world on rights protection and face a music industry which disadvantages creators’ earnings, the talent pipeline will diminish.
- The UK Music Industry worked hard to get implementation of the European Copyright Directive which has important provisions that strengthen the rights of music creators and support for these provisions should continue.
The need for Data and Administration Reform
- Songwriters and composers, as opposed to artists and performers, enjoy the benefits of exclusive rights and collective rights management. The publishing system has undergone positive reform which means that generally the songwriter or composer receives circa 80% of royalties generated whether collected by the publisher or collecting society. The Ivors Academy supports publishing and collective rights management, the issue is that this sector is being undermined by the market dominance of the major labels.
- The lack of reform of data and administration hurts music creators the most. It results in vast quantities of royalties not being paid to the songwriters and composers of the music while major rightsholder still benefit through market-share-based payments. Until such time as the system is properly reformed, those rights holders with large market share benefit from a double dip.
- The practice of recordings being released onto streaming platforms without even minimal publishing information must stop as it generates enormous wasteful effort trying to retrospectively identify this information and reduces or stops the royalties due for creators.
- It is clear that enormous benefit would come from merging of label and publishing back- office administration e.g. merging of PPL and PRS databases, and a single registration portal globally for recordings and works.
- The lack of industry-wide plans for reform of data and collective rights management is a real failing of the industry which impacts music creators the most.
The need for Research
- The IPO has supported research into the music industry data issues – Music 2025 and is currently funding research into Creators Earnings. Both research activities have been met with hostility by the music industry and the amount of data being confidentially submitted to this research has been limited, undermining the success of the research. Access to data for research must be addressed. Collecting societies, labels, publishers, and DSPs should be encouraged to support the IPO-sponsored research.
There are many other points contained in our written submission, but we hope this letter is beneficial in highlighting key points. We remain at the Committee’s disposal throughout the duration of the inquiry.
Warm regards, Yours sincerely,
CEO, The Ivors Academy of Music Creators