On the UK music industry market study: The show ain’t over till the IPO sings! 

The following MBW op/ed comes from Annabella Coldrick, Chief Executive of the Music Managers Forum (MMF). The MMF represents more than 1,200 managers of artists, producers and songwriters, mostly based in the UK with global businesses

For many music makers and their managers, yesterday’s “update paper” from the UK’s Competition & Markets Authority (CMA) that promised to “shine a light on the inner workings of music streaming” probably felt like a damp squib.

The publication marked the first stage of our competition regulator’s probe into the streaming market, a process triggered by a fairly excoriating report from the highly influential DCMS Select Committee back in July 2021.

However, while the Committee’s MPs recognised “fundamental structural problems within the recorded music industry” and advocated a “complete reset” of how streaming works, the CMA’s lawyers and economists appear to advise a far more cautious approach focused on consumers not creators.

The status quo, they suggested, was actually delivering quite well. The recorded industry is booming, artists have greater leverage, songwriter royalties should be increasing, and, most importantly, the consumer has never had it so good. Consequently, they would not be launching a more rigorous market-wide investigation

“Streaming has transformed music,” commented the CMA’s Interim Chief Executive, Sarah Cardell. “Technology is opening the door to many new artists to find an audience and music lovers can access a vast array of music, old and new, for prices that have fallen in real terms”.

However, while this was undoubtedly music to the ears of record label representatives, and suggested some sort of conclusion, things are actually not as cut and dried as they seem.

For a start, yesterday’s publication contained “preliminary findings”.

The CMA’s market study remains ongoing, and they are encouraging evidence and feedback until August 19th. A final report won’t be published until January 2023, and may still include recommendations to the Government. The process is still ongoing.

Secondly, and by their own admission, the CMA’s primary focus is not on industry – it is on the consumer. In this context, there was always likely to be an element of foregone conclusion. Few would dispute that streaming has been anything but a huge positive for audiences, making the music they love more accessible and affordable than ever.

From here, the 97-page document is almost as interesting for what it doesn’t cover as for what it does. In fact, some of the omissions are pretty extraordinary.

Fundamental areas of discussion such as opaque licensing practices, black box collections, or “blind check” payments to major record labels receive only passing mention. They appear to accept blindly that DSP deals with labels are “not relevant to artists’ understanding of what they are paid” but they “do expect artists to have relevant information about the basis of calculating their earnings”.

They said they saw some positive examples of this but it was not consistent across all labels and they think the information could be presented in a more straightforward way with appropriate guidance on how to interpret the data.

This is very relevant given recent discussions in MBW regarding TikTok, Spotify Discovery Mode, SoundCloud FanPowered Royalties and Facebook/Insta (Meta) deals, none of which have led to any communication from labels to artists about how these materially impact their income.

Other critical and often hidden elements of streaming deals, such as equity or ‘free’ advertising or lump sums, which could potentially mean acceptance of a lower revenue split, are only shared with artists on a discretionary basis. Most importantly this share can only be asked for if artists and their representatives have knowledge of them, which they still have no right to.

These areas are all hugely disappointing and quite frankly incredible. As is the CMA’s assertion that, in an era of record-breaking revenues, labels do not appear to be making sustained excess profits.

Fortunately, for artists, songwriters and music managers, this is not the end of the line.

The MMF, FAC and other creator representative organisations in the UK will continue submitting feedback and evidence to the CMA, but we are also involved in parallel pan-industry work being led by the Government’s Intellectual Property Office (IPO).

This evidence-led research is very much focused on market reform, with an oversight group developing the outline of a Transparency Code, new data standards for song royalties, as well as three research reports investigating the potential of equitable remuneration, contract adjustment, and rights reversion mechanisms. These are important discussions, with a real ambition for change. They also come with a stated commitment from the Government that, if the industry cannot mutually agree to substantive changes as was the case in France, then there is a backstop of legislation.

Notwithstanding the CMA report, these critical conversations within the IPO will continue – and with greater importance than ever. It is this process that is most likely to deliver the most tangible results for artists, songwriters and music creators. The MMF will be placing full focus on achieving a fairer deal for our members either through an industry agreement or through legislative intervention.

Music Business Worldwide

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