Recommendation 10

HM Government · verbatim extract Rejected

The government wants to see a music streaming sector where the contributions of all parts of the industry are valued and rewarded, where investment is encouraged, and where great British music flourishes. There is so much to celebrate about the UK’s streaming sector. Music streaming revenues have grown consistently in recent years, supporting the continued investment in new music by artists, songwriters, and rights holders. In 2023, UK retail streaming revenues were £1,866 million (up 9.8% on the previous year), 5 while streaming revenues for the UK recorded music sector were £962.1 million (up 8.4% on 2022). 6 In the same year, 2,245 artists reached 10 million or more streams in the UK, and independent labels accounted for 29.2% of album equivalent sales, increasing their market share by nearly a third since 2017. 7 Creators releasing music today also enjoy more choice in how they finance and release their music, through the increasing availability of a range of deal types that can offer substantially higher royalty rates than traditional record deals (including distribution-only, label services, and profit-share models), as reported in the IPO- commissioned Music Creators’ Earnings in the Digital Era report. Alongside this, many record labels have taken steps to update older, pre-streaming recording contracts, including through increasing royalty rates and disregarding unrecouped balances, meaning some creators have in recent years begun to receive royalties for streaming for the first time. We encourage the record labels to go further in this direction. The government is pleased to see the progress that the music industry has already made in addressing issues around music metadata and transparency, through groundbreaking industry agreements on these topics. The government is confident that these agreements will result in real benefits for creators and values the constructive efforts from all parts of the industry in developing and implementing them. The government recognises that many creators continue to have understandable concerns about remuneration and the split of streaming revenues. It is vital that discussions and policy-making in this area take place on an informed, evidence-led basis. In that context, it is important to note that the Competition and Market Authority’s (the CMA) market study into music and streaming found that it is unlikely that the outcomes that concern many stakeholders are primarily driven by competition, and that there is a greater risk that a competition intervention will result in unintended consequences and worse outcomes for both consumers and creators. The CMA consequently decided not to make a market investigation reference. The IPO also commissioned independent research into three potential changes to copyright law: Introducing a legal right for performers to be paid under an equitable remuneration model when their music is streamed. Giving creators a right to renegotiate their contracts in certain circumstances ( contract adjustment mechanisms ). Giving creators a right to regain ownership of their rights after a set period of time ( rights reversion ). This research suggests that these potential legislative measures do not necessarily offer low-risk or low-cost solutions to the concerns raised by creators. Introducing a right to equitable remuneration from streaming could lead to significant changes in the distribution of streaming revenues. Whilst this may benefit some artists, it is likely, depending on its precise form, to also have significant unintended consequences, potentially including appreciable reductions in industry investment. The research into contract adjustment mechanisms and rights reversion shows that the impacts of these measures in other countries is not clear, and calls into question whether they would deliver the changes sought by creators. Given the challenges facing the music industry, including increasing global competition, it is especially important that the government gives careful consideration to the risks of intervention. Accordingly, the government’s current view is that the best way to address creator concerns on remuneration in music is through dialogue within industry and, where appropriate, industry-led action. Ministers were therefore pleased to approve the continuation of the Creator Remuneration Working Group ( Terms of Reference and Membership ) shortly after the election. The Working Group met most recently on 31 July 2024, where attendees discussed issues facing artists on older, pre-digital recording contracts. Ministers hope that further progress can be made and reserve the right to consider alternative measures if necessary. The agreements on metadata and transparency demonstrate what can be achieved through an industry-led process. It is important that the Working Group is afforded the fullest opportunity to explore remuneration issues, without prejudging any possible outcomes. We will keep this under review in light of