Musicians, including session players and instrumentalists, would receive a fairer share of revenues from streaming platforms under reforms being considered in the UK.
If implemented, new recommendations from a select committee of the Department for Digital, Culture, Media and Sport would involve a "complete reset" of the industry with wide-ranging implications not just for artists, but for record labels, streaming platforms and listeners.
One of the committee's main recommendations is a more equitable division of royalties and rights payments from the streaming economy, which has earned Pound 3.5 billion since 2009. Presently only 8% of UK musicians derive 5% or more of their income from streaming.
Under the current system, musicians and songwriters receive revenue every time their music is played by broadcasters - namely on radio stations and in TV programmes and films. This type of play is regarded as "communication to the public", fixing the distribution of revenue from the relevant copyright collecting society at 50/50 per song for record labels and performers.
Conversely, a stream through services such as Spotify or Apple Music is considered a means of "making available" a song, a status which does not provide a fixed rate of revenue. This makes most musicians' payments dependent on negotiations between the streaming platforms and the major record labels.
In the case of the major streaming platforms, this generally results in a percentage breakdown of around 55/30/15 for record labels, streaming platforms, and performers and publishers, respectively. Under this arrangement, session musicians (who are not part of the band but contribute to a song) usually do not receive royalties. Their loss of revenue has been exacerbated due to lack of live performances during the pandemic.
To remedy these inequities, the select committee propose adding something akin to a "communication to the public" right alongside the existing "making available" one. The World Intellectual Property Organization proposed something similar earlier this year.
This could be similar to the current model in Spain. In 2006, the Spanish government introduced a scheme where, each time a song is performed in public (which includes streaming), all the musicians and songwriters involved in its performance and composition will receive a small payment. These payments are collected and distributed to artists, including those outside Spain.
Another committee proposal - to tighten regulations on copyright protection - has the potential to generate additional money for all sectors.
Focusing on platforms such as YouTube, which host user-uploaded content, the committee agrees that streaming services should be compelled to obtain licenses for the music they allow on their platform.
One proposed way to encourage this would be for the UK to adopt a version of an EU directive on copyright that would weaken the "safe harbour" justification used by online platforms. This is the notion that online services should not be held responsible for copyright infringement in content uploaded by third parties.
The committee suggested that this makes it harder for artists and record labels to strike favourable deals with platforms. If unlicensed music continues to appear on platforms such as YouTube, those platforms will have less incentive to make a deal with the artist or label to host official content.
In turn, the popularity of various "freemium" options - where users can access some content for free, with additional content accessible by subscription - means there is no incentive for the main streaming platforms to raise their subscriptions above the Pound 9.99 per month ceiling that has existed for more than a decade.
The committee also wants the Intellectual Property Office to take on the task of improving industry metadata - information attached to music files that identifies all people who have rights to a song.
Currently, streaming services and record labels can claim that they cannot identify rights-holders, resulting in a "black box" of unclaimed revenues (amounting to US$2.5 billion in 2019 alone. These are often misallocated or ploughed back into the industry, disproportionately benefiting the wealthiest record companies and performers.
The committee is also calling on the government to use its authority to investigate the impact of the oligopoly formed by the three biggest record labels - Warner, Universal and Sony. There is also evidence of not insignificant cross-ownership, with Sony and Universal having financial stakes in Spotify, and the Big Three owning the three biggest music publishers.
This raises tough questions for everyone who listens to music. Paying a low monthly subscription to major streaming platforms for access to virtually all songs that have ever been recorded is an attractive option, but only the most popular musicians benefit from the existing model.
There are smaller, specialist platforms, including Sonstream and Bandcamp, which provide a more intimate connection between artists and listeners. These services pay the artists more, but have higher fees for listeners.
East Asian schemes to monetise the relationship between fans and their favourite bands could be adopted in the UK. The nascent market in livestreaming also has great potential to pay money directly to artists.
Consumer behaviour is the missing link in all these discussions. After all, piracy and low-fee subscriptions exist, ultimately, because consumers expect not to pay so much for music. Any reform of the streaming industry must take this into account, even if current discussions leave this out.
As the chair of the DCMS committee, and many of its members, are Conservative MPs, it is likely the government will respond positively to the report. Future legislation will hopefully raise the pay of the average musician in the UK, even if that means that we will all pay a little more for music.
Author: Andrew White - Visiting professor, University of Nottingham