Copyright (Rights and Remuneration of Musicians, etc.) Bill — House of Commons, 2021-12-03
Topic: Mixed Topics
Esther Louise McVey (Conservative, Centre-right): I begin by paying tribute to the hon. Member for Cardiff West (Kevin Brennan) for his tireless work to bring this Bill to the House and, more broadly, to raise the profile and significance of the rights and remuneration of musicians in Parliament and beyond How do we get there? How do we get those rights and remunerations for our musicians and creatives? How do we ensure a fair payment for artists in this age of streaming? First off, we should acknowledge that streaming has completely changed the economics of music, and understand too that streaming saved the music business. It made it convenient once again for people to consume music legally, rather than through illegal file sharing and copying, as many hon. Members have talked eloquently and way too knowledgeably about today The idea of every single song being legally available in one place is quite incredible. It is now commonplace, but it was a brave and innovative vision and move from Daniel Ek, Spotify’s founder, back in 2006. Streaming has significantly broadened access to music. There were 100 million new music subscribers in 2020, taking the total to 467 million, whereas back in 2015 it stood at 76.8 million. Each one of those subscribers is paying on average £120 a year, so we can see the growth and the enormity of streaming. Yes, it has revolutionised the industry, but it is worth a significant amount of money that needs to be fairly distributed among the writers, creatives and performers My focus today, however, is on these needs that must be addressed: the power imbalance between the artist, the record company and the publisher; the conflict of interest between the major publishers and the record companies; and the lack of transparency in the industry. Let us look first at the relationship and interplay between the three major record labels, which hold the master recordings, and the control they have over the three major publishing companies, which hold the song copyrights The three major record companies, Universal, Warner and Sony, own the three largest publishers, Universal Music Publishing Group, Warner Chappell Music and Sony Music Publishing, respectively. Obviously, concerns are raised about how those three publishers can advocate for songwriters’ interests if they are being controlled by their parent companies As a guide to how the revenue from music is split, the typical income earned by a master holder is about 80% and the typical income earned by a publisher is about 15%. Given that the major record labels own the publishers, it is in their interest to push for the income received on the master-sale side to be greater than on the writers-publishing side. The record companies, not the publishers, also do the deals with the digital service platforms so they can take the lion’s share of royalties from those songs To add to that, if hon. Members can believe it, there is even an imbalance in the speed of the payment. The record companies are paid much faster than the publishing side, because they control the supply chain. They take payments through an automated process, while the publishing side is paid through a more cumbersome manual process. Those imbalances, and the further imbalances that run from them, should be the focal point of policy makers and industry scrutiny. I welcome the Government’s intervention in referring the matter to the Competition and Markets Authority. I have a couple of other helpful suggestions that might go some way to improving the relationship between artists, record companies and publishers. Songwriters and artists should have a direct seat at the table in the remuneration discussions and should be represented by their peers, not the record labels or publishers A music stream should be treated as a licence, not a sale. A licence gives the artist 50% of the royalties for a song, whereas a sale gives them between 18% and 30%. Since streaming became the main mechanism for consuming music, record companies have unilaterally decided that a stream should be considered a sale, because it maximises their profits. Artists and songwriters need to update clauses in their contracts to reflect the true nature of how their songs are consumed, which is via a licence Clarification also needs to be introduced to the grey area of breakage in record companies and digital service providers. A streaming is not included in any detail in most agreements and breakage is not subject to a contractual method of distribution. Confirmation is needed that all income gained in that way by major record labels is distributed fairly and appropriately. Some have even suggested a kitemark On the lack of transparency, for an artist to understand their payslip or royalty statement, they need to be shown two key things: how many units they sold and how much each unit sold for. If an artist wishes to inquire about the real level of sales, they will need an audit which, at the moment, is incredibly expensive and can take about 24 months to book and complete. That is not how payslip querying should be. The artist never gets to see the total amount that has come in. An online seller of goods would know the gross amounts and what needed to be deducted for services and commission, but that is not the case in the music industry. That needs to be changed In a final twist, if an artist manages to get their books audited to see what is coming in from the streaming service, should they ask for back-up information—in the old days, they could get the cost of CDs and how many copies were sold—in this instance, from streaming, that is covered by a non-disclosure agreement that removes the right to see how the money flow comes in, because companies say that it affects their ability to be competitive. Such things need to be changed Writers and artists are businesses, entrepreneurs and inventors who have created a product. We have to be on the side of those creatives and musicians, because they deserve their full dues. As the hon. Member for Sunderland Central (Julie Elliott) rightly pointed out, covid shone a spotlight on the area. In the past, artists could go out and earn extra money by performing at live events, but they could not in covid. They relied more heavily on what was coming in from streaming, but there was nothing there to rely on. Many of them have been left without income for a considerable period, and have therefore turned to the state for support It would be remiss of me, as a former Secretary of State for Work and Pensions, not to ask this question. Why should the taxpayer pick up the bill for the international giants who are not paying their contributors, creators and writers correctly? That is wrong. We might have needed to provide some extra money through universal credit, and that would be right, but these international companies should have paid their way and not asked the British taxpayer to pay those wages on their behalf There are many reasons—and I say this from a Conservative point of view—why we have got to get this right. These are points of principle. We do not believe in monopolies controlling an industry; we do not believe in supersized entities at all, whether they are the state or giant companies, and nor do we believe in imbalances in negotiations or conflicts of interest. However, we do believe in a fair deal for the taxpayer, and for the Exchequer too—money should be coming into the Exchequer to pay for all the public sector services that we need—and we believe absolutely in the rights of the individual. We need to stand up for these people It has been argued that the record companies must spend vast amounts of these artists’ money to pay for new artists. That is questionable, if not risible. Any other business that saw such a failure rate in the new products it was bringing to the market would look at its business model and ask, "Are we getting this right?" That is particularly relevant in an age when we can spot a star by looking at the number of followers on Instagram, YouTube and various other platforms Moreover, the companies are reducing the money of artists who have done well. They are spending the money of artists to whom, I would say, they owe a duty of care because they have contracts with them—contracts on which they embarked on a potential, hopeful, going-forward basis. Surely the artist to whom they owe that duty of care must come before the potential artist I would also throw in an auditor for these companies’ books. If they are reducing profits from their artists, on their own books, that means that they are reducing the amount of tax that they pay to the country.