Main report firms hammered by UK politicians’ streaming inquiry report

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In January, MBW watched a number of British politicians take turns challenging (and verbally abusing) the heads of the biggest record companies in the market live on camera.

They did so on behalf of a bipartisan British parliamentary inquiry into the economics of music streaming.

The written report on this investigation will be published in the next few hours. And according to MBW sources – perhaps unsurprisingly – the majors take something like a text breakdown.

Our sources tell us that the report released by the Committee on Digital, Culture, Media and Sport (DCMS) makes two special recommendations to the UK government that will inevitably make major record companies uncomfortable.

The first of these recommendations concerns the right to “fair remuneration” (ER), a concept recently endorsed by artists such as Sir Paul McCartney, Chris Martin and Stevie Nicks.

The MPs behind the streaming investigation are calling on the UK government to introduce a right for artists to earn “fair wages” on digital platforms, our sources say.

This would likely result in non-interactive music renditions on platforms such as Spotify being treated as “rental” under UK law, with 50% of the royalties generated for phonograms being paid directly to performing artists through a collecting society.

Previously, the UK record industry’s numbers had railed against this prospect.

The BPI, which represents major record labels in the UK, has described ER as “a recipe for disaster” that “would drastically shrink the total pool of licenses available to labels and artists”.

The other standout recommendation in the new Economics Of Music Streaming report is that the DCMS committee aim its guns more directly at the majors.

MBW believes that the report recommends that the UK government refer the so-called “dominance” of Universal Music, Sony Music and Warner Music to the UK Competition and Markets Authority (CMA).

In that recommendation, MBW is told, the report highlights particular concerns about an alleged imbalance in the market power of artists negotiating with major record labels.

(That argument was directly challenged in January by the UK majors’ bosses, who posited that the recent success of independent artists – through industry distributors – shows that the balance of power in the music business has shifted more towards the artist community, with more opportunities to Bringing music to market than ever before.)

MBW understands that the new DCMS report also argues that a CMA referral is warranted by a lack of transparency in the major record companies’ private licensing negotiations with streaming services – specifically whether those discussions could lead to playlist perks for the majors, the independent Labels hinder and / or artists.

We are also informed that the DCMS report raises concerns about the “Safe Harbor” protection YouTube currently enjoys in the UK market. It also encourages the UK government to consider the balance between remuneration for a song right and a right to record from royalties on streaming platforms.

In relation to the more substantive recommendations of the report, however, it looks like two things: (i) That the UK government should introduce / adopt a right to stimulate “fair compensation” for recording artists on UK streaming services; and (ii) the UK government having the CMA investigate the market power of the three major record companies in the UK.

What’s happening now? It all depends on the UK government’s response to the DCMS committee investigation and its recommendations.

Previous DCMS committee inquiries required government responses, while others did not.

In addition to oral statements, the DCMS Economics of Streaming Inquiry was presented with over 300 pieces of written evidence.

Submissions came from Universal Music, Sony Music, Warner Music, Spotify, Hipgnosis Songs Fund, Beggars Group, BMG and a range of British artists and songwriters.Music business worldwide

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