How to fix streaming without wrecking music…

The following MBW blog comes from Paul Pacifico, CEO of the Association of Independent Music (AIM) – a UK-based collective representing independent labels and artists.

Most people reading this article may not have a physics degree, but they can probably recite Einstein’s theory of special relativity: E=mc2.

The art of simplifying big concepts to a paragraph, a phrase, a word, is sublime and, when it works, the effect can be incredibly powerful. 

We see this used in politics all the time.  From “Things Can Only Get Better” to “MAGA”, these powerful messages offer a compelling message that your problems will be solved if only you trust the promise of the simple ‘fix’ to come.

We are currently in the throes of a far-reaching and much needed debate about the future of the streaming music market.  We have seen a DCMS Select Committee Inquiry begin, start to peel back the layers, and to see the complexity of the machinery under the bonnet.

Music rights and streaming are built on complex mechanisms, so slogans that appear to promise simple solutions to complex problems are very alluring.

Such is the case with ‘equitable remuneration’, which sounds like it means ‘fair payment’. Who can argue with that?

The independent music community has, for many years, been all about making fair digital deals and taking action to do the right thing. Yet many of us don’t support equitable remuneration. How could that be?

Let’s be clear. I am completely in favour of people being paid fairly – from session musicians and other ‘work for hire’ roles in the studio or on tour, to featured artists and songwriters.  I am equally in favour of there being appropriate incentives for investment that enable entrepreneurs to build businesses, pay their teams properly and deliver the opportunity for creators to collaborate with commercial partners to grow value in their work and long-term careers.

In all of those negotiations, there is a delicate balance to be achieved and each individual situation merits its own calculus.

Let us also be clear that ‘equitable remuneration’ is a legal term that is not so simply put into plain English as to mean ‘fair payment’. Make no mistake, this is not a new right that delivers additional value to creators.

The remuneration in question is not termed ‘equitable’ because it is fairly shared. Rather, it is named in this way because it is a mechanism of ‘fair’ compensation for rights that have been stripped away and that can no longer be negotiated commercially.

For those who feel that, despite this, equitable remuneration might not be such a bad thing, I have some sympathy.  Some in the music sector, that could and should have played and paid much fairer, have got away with exploiting their negotiating advantage for far too long.  In a sustainable ecosystem, might cannot always be right!

However, two wrongs don’t make a right.

“Different solutions across multiple services that speak to different artists and fans in different ways and for different reasons might well be the most effective way forward.”

The fundamental basis on which creators generate rights and then trade them for income and services should not be stripped away in favour of a poorer price set by a compensation scheme because legacy contracts do not reflect contemporary norms or best practice.  Industry participants should deal with the contracts themselves to put them right.

In reality, we know what has happened to date when rates have been set by government-licensed monopolies.  Copyright tribunals tend to err on the side of caution, fearful of lawful monopolies being allowed to exploit their position in the market.

Radio pays through equitable remuneration and, whilst the chunky payments per play on radio are great, they are predicated on the aggregation of massive listenerships.  On a per-listener basis, these payments are significantly lower than current streaming rates.

Commercial radio currently pays around 4% of revenue for licences negotiated on the basis of ER.  Streaming pays around 55%.  That is an enormous circle to square.

It is easy to say that the government can ‘fix’ this, by forcing rates up rather than lowering the streaming bar to the radio base. However, no one has yet demonstrated a compelling example.

It is very difficult to argue for a solution that makes some of your constituents worse off.  Equitable remuneration would ultimately make them all worse off. Session musicians and some featured artists argue that something is better than nothing, but the result cannot be a net loss.

And then we also have ‘user centric’. Very compelling but will it do anything to grow the market? Or simply create a set of different winners and losers and put other fundamental changes on ice?

So, what is the way forward?

The results of the recent debates at IMPALA on all of this were very clear and included stakeholders of wide-ranging commercial interests and cultural perspectives.  The outome is that there is not one simple ‘solution’ but, instead, ways to really move the needle and address core issues that neither ‘equitable remuneration’ nor ‘user centric’ touch.

The independent sector wants change – we want streaming to work for all, and we see the solution in promoting multiple options that will act together to achieve just that.  AIM has put forward an alternative distribution idea in the ‘Artist Growth Model’ and that is just one of the positive and forward-looking proposals included in IMPALA’s 10-point plan to make streaming work better.

Different solutions across multiple services that speak to different artists and fans in different ways and for different reasons might well be the most effective way forward.

It would certainly lead to the kind of diverse and pluralistic world the independent community stands for.

“Our goal is to deliver a music ecosystem that offers inclusive access, equity, cultural diversity and sustainability – in economic, social and environmental terms.”

The IMPALA 10-point plan, including the AIM Artist Growth Model and other models like Pro Rata Temporis, Active Engagement and User Choice propose a range of options that we believe actually change the system to benefit more artists, not just change things around.

We have also tabled other ideas like tax breaks to incentivise investment and forward-facing mechanisms to reward creative contribution. Our goal is to deliver a music ecosystem that offers inclusive access, equity, cultural diversity and sustainability – in economic, social and environmental terms.

The next step must surely be to find a mechanism by which to discuss and debate different options’ relative merits fully, without resorting to simplistic phrases.  To do this, we must work to leave behind the Punch and Judy politics in which many have become entrenched and to allow the facts to speak.

Our priority is real progress, not a slogan and, in reality, this plan gives results every bit as zingy as E=mc2.Music Business Worldwide

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