This is going to take a wee bit of explaining. Not least as, in the US, artists don’t get paid when their music is played on the radio.
In the UK – in most nations other than Iran, North Korea, and China, in fact – artists do get paid when broadcast radio DJs play their music.
The mechanism by which these artists get paid is all-important: the cash owed by radio stations is paid to a collection society (PPL in the UK), which then distributes this money, 50% direct to the artist/performers, and then 50% to the record companies.
This payout system is known as “equitable remuneration”, and sees money going straight into the pockets of artists regardless of how unrecouped they might be over in Record Label Land.
As you’re probably aware, a UK Parliamentary Inquiry is currently looking into the economics of music streaming in Britain.
One of the proposals they’re chewing over is whether algorithmic plays on the likes of Spotify (i.e. plays that have been chosen for you, as opposed to those on which you’ve pressed play) should be treated under the same rules as “equitable remuneration” on radio in the UK. Ergo: Whether 50% of the money generated by these “lean-back” plays should go direct to artists, no matter how unrecouped they might be over in Record Label Land.
(The record labels argue that allowing government-licensed bodies to set royalty rates for streaming services, as they do for UK broadcast radio, would be a step back for the industry. The artists argue that they want more money from streaming, and they want it now.)
So here’s the big news today (April 20): the stature of the artists calling for the UK government to enforce “equitable remuneration” on streaming services just went blockbuster.
The below open letter, obtained by MBW, has been sent to British Prime Minister, Boris Johnson.
It has been penned jointly by the artist-advocate #BrokenRecord campaign, alongside the Musicians’ Union and the Ivors’ Academy (in tandem with their #FixStreaming campaign). It’s undersigned by around 150 artists, including some of the biggest global acts in existence.
“Only two words need to change in the 1988 Copyright, Designs and Patents Act. This will modernise the law so that today’s performers receive a share of revenues, just like they enjoy in radio.”
Open letter signed by Paul McCartney et al
Signees of the letter include Sir Paul McCartney, Coldplay frontman Chris Martin, Sting, Stevie Nicks, Annie Lennox, and the three surviving members of Led Zeppelin, Jimmy Page, Robert Plant, and John Paul Jones.
Other household names to sign the letter include Damon Albarn, Joan Armatrading, David Gilmour, Massive Attack, Noel Gallagher, Marianne Faithfull, Labi Siffre, and Brian Eno.
It’s been sent ahead of the politicians leading the Parliamentary Inquiry into streaming making recommendations to the UK government (and Boris Johnson) about whether political intervention is needed in the way that royalties are paid out by streaming services in the UK, and where this money goes.
The part of the letter relevant to equitable remuneration (bolding MBW’s own) reads: “Today’s musicians receive very little income from their performances – most featured artists receive tiny fractions of a US cent per stream and session musicians receive nothing at all. To remedy this, only two words need to change in the 1988 Copyright, Designs and Patents Act. This will modernise the law so that today’s performers receive a share of revenues, just like they enjoy in radio. It won’t cost the taxpayer a penny but will put more money in the pockets of UK taxpayers and raise revenues for public services like the NHS.”
The letter, which you can read below, also calls for songwriters to be paid larger sums of money from streaming services, and for a specialist regulatory body to oversee the music industry in future.
He wrote in an MBW op/ed: “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.”
“Equitable remuneration (ER), would, quite frankly, be a recipe for disaster – a black hole that would suck value away from music sector and towards the platforms.”
And Geoff Taylor, Chief Exec of the BPI – which represents both the major and independent labels in the UK – wrote in a separate op/ed that the adoption of equitable remuneration would “quite frankly, be a recipe for disaster – a black hole that would suck value away from music sector and towards the platforms”.
Added Taylor: “Everywhere around the world that we see ER systems, they deliver tiny shares of revenue to labels and artists, because they take away the ability to say ‘no’ to users of music.
“That’s why all UK broadcasting generates only £85 million per year for labels and artists combined, compared to more than £600 million a year from streaming.”Music Business Worldwide