Music industry bosses to defend right to large chunk of revenues from streaming services such as Spotify amid threat of crackdown
Music industry bosses will this week defend their right to a large chunk of revenues from streaming services such as Spotify amid the threat of a crackdown.
The heads of Britain’s three major labels – Warner, Sony Music and Universal, which has Taylor Swift on its books – will tell MPs that their huge cut is fair reward for the risks involved in funding recordings, distribution and marketing.
The Department of Culture Media and Sport committee’s probe into the economics of music has so far heard arguments from musicians including Elbow’s Guy Garvey and singer-songwriter Nadine Shah, who believe artists should be entitled to a larger share of revenues from streaming services such as Spotify and Apple Music.
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Streaming services do not disclose their revenue breakdown, but artists estimate that, of a £9.99 Spotify subscription, £4.58 goes to labels, around £2 to Spotify and just 46p to artists – with the remainder going to rights holders and in taxes.
One major label source said: ‘If regulations order streaming platforms to pay artists a specific share, we would have less to invest in breaking new artists and the platforms may put up subscription costs.’
Geoff Taylor, chief executive of the British Phonographic Industry body, told the Mail on Sunday: ‘Introducing new regulation to a successful and growing music sector would threaten to reduce the value of the UK music business, undermine investment into new talent and new music – leaving fans and artists worse off – and reduce the UK’s global competitiveness.’
The shutdown of the live music industry has sharpened the debate around streaming revenues as artists who typically depend on income from performances attempt to stay afloat.
Taylor, who’s body represents 450 UK labels, said that successful artists help to subsidise those which do not break even with just one in ten artists typically expected to succeed commercially.
British artists including Ed Sheeran, Stormzy and Dua Lipa were among the most streamed in the UK last year, with newer acts including Jorja Smith, AJ Tracey and J Hus also drawing big audiences.
Tom Gray, of Gomez, who runs the #BrokenRecord campaign, told the Mail on Sunday: ‘We would like a remuneration right for performers to reflect that streaming is not a ‘sale’ as the majors insist but is, in fact, what a child can see – a combination of rental, passive radio-like listening and a license: all of which should produce higher rates of pay for artists and performers than a ‘sale’.’
The growth of streaming has breathed new life into the music industry, which was ravaged by piracy in the early 2000s. Sources said an increase in subscription prices could open the door to the widespread return of piracy, which costs the industry an estimated £200 million a year. Major labels signed 153 new artists in the UK in 2019, up 38% on 2010, BPI figures show.
The select committee’s chair, Julian Knight MP, has claimed that some people interested in appearing before the committee feared speaking up, worried it could damage their careers.
A major label insider claimed: ‘Many artists on major labels are perfectly happy with their contracts and the revenue they receive, however they don’t want to be seen as sticking up for a multinational corporation.’