Beggars Group boss Martin Mills has called on his fellow record labels to make some significant changes to their business practices – for an urgent reason.
Mills suggests that, if they don’t already, majors and indies should start paying catalogue artists a 15% minimum royalty on music streaming usage – as well as wiping clean artists’ unrecouped debt after they have been signed for 20 years.
So far, this probably sounds like predictable music biz fare: ethical indie godfather attacks corporate greed.
But, this time, there’s a little more to the story.
Speaking at the pre-Grammy Entertainment Law Initiative lunch in Los Angeles on Friday (February 12) Mills explained that a safe harbour victory was “within our grasp” in Europe.
A small statement, but a hugely significant one: Mills was referring to the industry’s attempt to overturn safe harbour laws in the EC – laws which currently help YouTube and others to host copyright-infringing material without fear of legal punishment.
“An industry with all component parts in harmony is an industry with persuasive political strength.”
Martin Mills, Beggars
If the music business ultimately wins this legal/lobbying fight, it could be worth billions to labels and their artists.
Music rights-holders now have to stand truly united for the best chance of victory, said Mills.
That means no sneaky one-upmanship like the majors trying to get a preferred royalty rate from webcasters in the US.
And, according to Mills, it also means every label (including UMG, Sony and Warner) committing to treating their artists – past and present – fairly in the streaming economy.
Any dubious accounting practices in the music business, he suggested, would inevitably lead to division between labels and artists – which the likes of YouTube and others could potentially use to their legal advantage.
Read Mills’s full speech, obtained by MBW, below…
The tectonic plates of the record industry shifted in New York on Sunday, June 21st last year. One outspoken singer and a tribe of indie labels changed the rules of the game, and Apple had the good grace to change course.
The major labels were seen to have failed the industry they supposedly lead, and misjudged the mood of the time, and the tempo of the deal.
Taylor Swift and the independents ensured that all artists and labels – including the majors – would get paid during Apple music’s free trial, which the three majors, with all their scale and power, had not managed – or chosen not – to achieve.
The new world order sees artists and independents, through their collective organisations including A2IM in the USA, Merlin, Impala and Win, taking their place at the top table.
Historically the 10 or 12 large labels led us all for the benefit of the industry, and the component parts of the industry sheltered under their umbrella.
Now they are three consolidated super-powers, under more acute financial pressure than we can even imagine, in a market that has shrunk by 50%, and thus now tend to make choices that are only in their own short term financial interests.
“We have never been as divided as we are now.”
Artists and owner-run independents, though, have a much longer term interest in the health of the food chain.
The component parts of this industry are badly in need of rapprochement. We have never been as divided as we are now.
A UK trade publication commented recently that the big rights owners are on one side, and everyone else on the other.
Accounting and trading practices adopted by the majors by virtue of the leverage afforded them by their scale leave the rest of the industry disadvantaged, under-informed and resentful.
Fair play, which should be at the heart of all commercial dealings with creators, is felt to be absent. We are not a community any more.
That division makes us less able to influence government policy in all of our best interests.
Right now the safe harbour issue is a prize within our grasp in Europe, and one which is worth many, many times more than the cost of what I am about to propose. But without that rapprochement, and the harmony that could engender, we are far less likely to win it.
“We are not a community any more.”
The majors’ calls for a united industry are based on control – their control of that industry.
We are now past that era, and unity needs to be based on shared and mutual benefits, for labels large and small, and for artists, not on the dominance of the few.
I believe the future lies in the majors accepting the need for change on the following fronts.
- To win the support of performers, all labels – majors and indies – should commit to a 15% minimum royalty for digital exploitation for all existing contracts. Not as much as current norms, but way more than many heritage artists are paid.
- They should also commit to the writing off of all artist balances after twenty years, so that after that point any earnings flow through.
- Independent and performer bodies are the most effective lobbying voices on behalf of all rights owners, independents and majors alike. Major labels should invest in their food chain by supporting these organisations.
- Practices of leveraging scale in digital service negotiations such as breakage should cease. Practices in negotiation which leave the artist poorer, confused and alienated should stop. There should be full transparency on digital dealings for all participants, and a fair share of ALL revenues should flow through to creators – as the majors do not yet do. Independents worldwide have already committed to this through the WIN Fair Digital Deals Declaration.
- The majors should accept that a track is worth what a track is worth, regardless of who owns it – as used to be the case in the pre-digital world. Through their licensing behavior with digital services, and through their submissions on the recent CRB hearing, the majors have been trying to establish a higher rate for their music than applies to the rest of us. That is no way to be part of a community. The reward for success should lie in the number of plays or streams, not in the value of each one.
An industry with all component parts in harmony would be an industry with persuasive political strength.
Government would understand more readily the need to encourage investment in culture, and how necessary safe harbour reform is, potentially creating a very positive net financial effect for the majors, and everyone.
And a more harmonious marketplace, where the artists and innovation are at the centre of the industry, would be nurtured for the benefit of all.Music Business Worldwide