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OPINION: The digital revolution streams ahead, but are performers getting paid properly?

Laura  Barnes
OPINION: The digital revolution streams ahead, but are performers getting paid properly?

Despite worries that the rise of streaming services would ruin the music industry, new reports suggest that the digital revolution has actually boosted revenue.

In its latest column for MI Pro, the Incorporated Society of Musicians (ISM) looks at the state of the industry today, and what work still needs to be done to ensure performers are getting a fair cut of the royalties…

The bells tolling the death of the music industry have been ringing out for quite some time now, each New Year bringing new announcements of the demise of any business models which might pay labels for their investment, and artists and writers for their talent. It was almost over for music, and streaming, it was said, would finish the job off completely.

So despite reports of the incredible streaming success of individuals such as Ed Sheeran, it was still a surprise when The Guardian published an article earlier this year titled “How streaming saved the music”.
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Citing figures from the Global Music Report 2017 published in April 2017 by the IFPI (International Federation of the Phonographic Industry) for global industry revenue growth for the second year in a row, it all suggested that reports of the death of the music industry had been, if not exaggerated, then certainly premature. With global music industry revenues achieving over £12bn in 2016 and set to grow further, more than a decade of reverses in music revenues had been reversed. Indeed, the ‘once-ailing’ music industry had reached ‘a historical tipping point’. Much of this new revenue was from streaming music services, revenues for which had leapt by 60% in 2016 to US$4.56 billion. The market, it said, was set to expand even further in coming years as paying subscribers increased, technology improved and new markets, such as China, opened up.

Reports of the death of the music industry had been, if not exaggerated, then certainly premature.

ISM

This was all a long way from the general view prevailing a couple of years ago within the industry. In March 2015 we wrote an article for our members’ magazine Music Journal in which we asked: “streaming – brave new world or catastrophe?”

Our jury was definitely out at that stage: the revenue models for streaming services seemed fragile, and the royalty shares payable based on a risibly low value per stream (less than one penny – to be split between record labels, composers, performers and producers).

Two years on, things are looking rather different.

According to financial analysts Goldman Sachs, in a report published in August 2017, the music industry will be worth a staggering US$41 billion by 2030, of which $34 billion – over 80% – will come from streaming services. $28 billion of this will come from paid-for streaming subscription services: more than the $27.4bn the entire recorded music industry was worth at its peak in 1996. Major labels such as Sony and Universal will see the value they bring to their parent companies rise massively.

But it is not just major labels who are gaining. Merlin, the global digital rights agency for the independent label sector, announced in August 2017 that its payments to members had now topped a billion dollars. The growth is impressive: in June 2017, 64% of Merlin members said that streaming services accounted for over half their digital revenues - up from 46% in 2016, and 34% in 2015.

Good news then. Licensing arrangements between services such as Spotify and composers collecting societies such as the UK’s PRS for Music (which includes the Performing Right Society – PRS) mean a share of revenue is paid to composers and publishers through the established rights collecting society framework.

The music industry will be worth a staggering US$41 billion by 2030, of which $34 billion – over 80% – will come from streaming services.

ISM

But what about performers? Here the situation is less favourable at present. Notwithstanding the huge and expanding global market for music streaming services, the shares payable to performers from streaming will, as in previous times, depend on what is in the contract with the record label. There is also no equivalent currently to the equitable remuneration right performers enjoy in relation to broadcasts of recordings containing their performances.

The key feature of this right is the fact that it is not assignable or waivable: in other words, regardless of the terms of any individual contract a performer may hold, the right for performers to receive a share of royalties’ from broadcasting of recordings of their work is not affected, and they can claim a share of royalties from broadcasts of their recorded performances. (In the UK, performers can join PPL (Phonographic Performance Ltd) -- visit www.ppluk.com for more information.)

This would be an immensely valuable right to secure, and performers organisations have seen the draft European Directive on copyright in the digital single market, published in autumn 2016, as an opportunity to argue for an equivalent right from streaming services. The draft Directive and responses to the consultation on the proposal are still under consideration at the moment and we shall watch with interest to see what emerges from further Commission deliberations.

This is an area where much continues to evolve. To the extent that there are more legal options for streaming and consumers are responding positively to them, it looks as though we are headed for a brave new world rather than a catastrophe. But the performers’ issue potentially casts something of a shadow over the bright digital future. Further reports to follow.

The IFPI’s report is available in PDF format here.

ISM Composers and Performers Packs

Make sure you have a copy of our special composers and performers packs.

The ISM Composers Pack is our essential digital resource for all composers. The pack includes advice, checklists and template contracts to help you as a composer protect your rights and get a fair deal when offered a commissioning opportunity, publishing or synchronisation agreement.

The ISM Performers’ Pack brings together top tips, invaluable advice from our experts, and a template contract to help you further your career as a performer and navigate the world of promoters, venues, booking agents and festivals with confidence.

Tags: music industry , royalties , ism , Opinion , streaming

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