Indie labels call for end to streaming ‘payola’ – as IMPALA unveils 10-point plan to reform sector

IMPALA, which represents many of the world’s biggest independent record labels in Europe, has published a must-read new report containing a number of suggestions the industry should consider for overhauling the way streaming works.

One of the most contentious parts of the manifesto centers on streaming services that offer rights-holders reduced royalties for guaranteed plays or “privileged treatment in algorithms or other features”.

In no uncertain terms, IMPALA says of such practices: “This is payola, and has no legitimate place in improving viability and opportunity for creators.”

The trade body doesn’t mention Spotify by name, but this certainly seems like a nod towards the platform’s ‘Discovery Mode’. Launched last year, ‘Discovery Mode’ enables labels to improve the frequency of their tracks appearing via Autoplay and Spotify Radio… so long as they accept a reduced royalty rate for any related plays.

IMPALA’s member companies include the likes of Beggars Group, Better Noise Music, Cooking Vinyl, Epitaph, !K7, [PIAS], Sugar Music, and Zebralution.

The body has distilled its new report into a 10-point plan you can read below – covering a bunch of other hot talking points in the music business too.

In addition to calling for an end to safe harbour privileges for digital services that IMPALA says “distort the market”, the org calls on individual nations across the EU to implement the European Copyright Directive and “protect their creative artists – not timidly, but fiercely”.

“We need to change the streaming status quo… The independent music community stands with artists, ready to help build better models for creators, consumers, services and the environment to make the most of the promise of streaming.”

Helen Smith, IMPALA

In its report, IMPALA rejects the prospect of “equitable remuneration” – a proposed change to streaming services that would see performers paid a parallel fee alongside labels (as they are currently from radio in markets like the UK) when a service likes Spotify algorithmically serves up music.

IMPALA instead calls on labels to “pay artists a fair contemporary digital rate” to artists, and says that it would like to see consumers more easily be able to search streaming platforms by label.

As you can see in the 10-point plan below, IMPALA suggests a number of new payout models for streaming.

IMPALA also asks services to do more to address ad-blocking and streaming manipulation because they remove value from the system.

Mark Kitcatt, Co-owner and MD of Everlasting Popstock and Chair of IMPALA’s streaming working group, commented: “We spoke to members to get a feel for what streaming can and should offer, and how we can get there. We have an array of ideas to deliver greater income and opportunity to creators, and greater value to fans.

“The safe harbour experiment has failed on both those fronts – it needs to be put away for good. Labels must pay contemporary digital royalty rates to all artists. And then we can put fans and artists at the centre of a plan to unlock the true potential of streaming for this industry.”

Helen Smith, Executive Chair added: “We need to change the streaming status quo. Our conclusion says it all. The independent music community stands with artists, ready to help build better models for creators, consumers, services and the environment to make the most of the promise of streaming. Our proposals will also be useful for EU countries implementing the copyright directive. Exempting short clips for example would be a giant step back in time. We hope Germany and others are listening.”

Paul Pacifico, CEO Association of Independent Music concluded: “It is vital to explore innovative solutions to streaming. It is also time to look beyond old world mechanics like equitable remuneration and into models that will work for a better streaming future. This paper will be helpful in setting out some of the tools that can really make a difference and achieve a more diverse and healthy music ecosystem.”

Click here to read IMPALA’s full paper on streaming, It’s Time To Challenge The Flow.

IMPALA’s 10-Points to Fix Streaming:

1. End safe harbours effectively – no new loopholes.

2. Pay artists a fair contemporary digital royalty rate.

3. Reform allocation of streaming revenue. Different services may wish to explore any or all of the following proposals:

A) Differentiation of rates:

  • Pro Rata Temporis Model – To deal with the value imbalance for long-form music content, for example by having a rate for the first 30 seconds to 5 minutes of a song, then further payments triggered at 5 minute intervals until 15m 30s minutes.
  • Active Engagement Model – Encourage artists to stimulate active fan engagement by attaching a premium value to tracks which the listener has sought out or reached by artist, track or album name, or where she has saved, “liked”, or pre-ordered an album or track, for example.
  • Artist Growth Model – Enabling artists to accelerate revenues to a sustainable level thereby supporting a broader diversity of emerging, and credible niche talent. The top tier streams would generate a bit less and bottom ones a bit more to help emerging and niche artists.
  • User Choice Model – Facilitate spaces within services for rightsholders to develop incremental revenues through direct relationships with fans, eg by offering access to extra tracks, better audio, and features.

B) No threshold for a song to start generating revenue from streaming.

4. Assure there will be no reductions in royalties in exchange for enhanced plays, or privileged treatment in algorithms, or other features that recreate elements of payola.

5. Agree and enable revenue enhancement mechanisms in markets where the services are failing to convert users to paid models.

6. More vigilance by music services on unlawful activity that removes value from creators, including streaming manipulation, ad-blocking and stream-ripping software.

7. Enable search by labels/performers/producers/composers/musicians/authors/publishers.

8. Boost local repertoire and languages by better profiling in playlisting and other features, as well as having track titles in more than one language or specific, and ringfenced funding mechanisms allocated to investment in new, local recordings.

9. Work collaboratively with a spectrum of labels, across all markets (e.g. through Merlin for independents) to ensure editorial algorithm developments don’t negatively affect diversity, local repertoire and opportunities for artist discovery.

10. Work with the recorded music sector to help assess and reduce the carbon footprint of digital music.Music Business Worldwide