When you listen to a song on Spotify, how much money is paid and to whom is it paid? Don’t know? Odds are, the artists and songwriters don’t know either.
Music streaming services have become so ubiquitous that it’s hard to imagine life without them. However, streaming is still a relatively new technology, and the music industry is often slow to adjust to technological change.
When music was mostly bought on vinyl, cassette, and CD and there was an HMV on every high street, music contracts were purpose built. A chunk of money went to the shop for its overheads and profits, then a variable percentage was taken by the record company to cover distribution, packaging, breakage, and marketing costs, profits et cetera. A small percentage of the remainder then went to the artist, to the music publisher, and the composers based on contract. Plenty of music is still purchased in this way, and Record Store Day is a great reminder that the industry is going from strength to strength.
When music is downloaded or streamed the costs mentioned above are much lower - sharing a sound file costs the record company considerably less than shipping CDs. However, some artists claim these fees are still being deducted from artists’ profits, although these services are often obsolete. How can a record company claim for packaging deductions of a digital download? How is ‘breakage’ on streaming relating to minimum guarantees actually calculated? And when managers try to find out who’s getting the money, how much these deductions cost, and what services they’re being charged for, they often don’t get the answers they need.
Some say that a contract’s a contract – if it becomes outdated, that’s no one’s fault and you’re still legally bound. This is an issue of transparency. Music is one of this country’s greatest exports, and yet we are falling behind many other places in the world. How can artists and managers go on to negotiate contracts that are fit for purpose in a global streaming market without understanding the agreements they already have? They still expect a percentage - but a percentage of what?
And they do need updated contracts. When an industry changes as much and as quickly as the music industry has in recent years, the accounting model needs to change too. As if the transition from physical to digital sales wasn’t complicated enough, streaming confuses matters even further.
Streaming doesn’t fit neatly into the pre-existing boxes. You’re not buying a track to play at your leisure in perpetuity whether in physical or digital format. When you stream it’s a one-off listen like when you hear a song on the radio. But it gives the listener more control than a radio play, because they choose what to listen to and when, although they don’t own it like a CD sale or a download.
With new technologies and no precedent, the music industry urgently needs to come up with a fair model for who gets paid what for streaming. But at the moment, each deal is different, and they are often kept secret by Non-Disclosure Agreements. Without basic transparency it’s difficult to decide what fair payment for music streaming would look like. Artists can ask for an audit, but this is too expensive for all but the most successful.
For emerging artists, this confusion can be a real threat. In their eagerness to make it, new talent can be ushered into contracts that don’t give them a decent deal. This is why, just last month, the Music Managers Forum, the Musicians’ Union, and the Featured Artists Coalition published a sample management agreement for those entering the industry. This gives newer artists and managers a starting point for negotiations on what a fair contract can look like.
Both pre-digital and streaming contracts need review, so the music industry needs to have an inclusive conversation to hear from the labels and the lyricists alike. And this is where politicians come in. It may not look like it from the Punch and Judy scenes of Prime Minister’s Questions, but brokering compromise is one of Parliament’s greatest strengths. In February of this year, Labour successfully pressured the Government into facilitating a code of conduct between search engines and the music and film rights-holders to help stop online piracy. Now we’re calling on the Culture Secretary Karen Bradley, to do the same for transparency within the music industry.
A good code would be in everyone’s interest, helping improve the reputation of the music industry and the finances of composers, artists, musicians.
As The Beatles might have put it, “we can work it out”.
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