Arguing that Europe’s musical artists and songwriters aren’t being adequately paid by streaming services, a Member of the European Parliament is championing a campaign to regulate Spotify and other music streaming services.
Iban Garcia del Blanco, a Spanish member of the parliament’s Progressive Alliance of Socialists and Democrats, is working on a non-binding report to be tabled at the parliament’s Culture and Education Committee.
“There is a loophole in our regulation. We need to fill it,” Garcia del Blanco said, as quoted by Politico.
It’s unknown what that report – titled “Cultural diversity and the conditions for authors in the European streaming music market” – will contain, but Politico reports the issue of remuneration is expected to “dominate” the debate.
Another area of focus, according to Politico, will be transparency; artists’ groups are calling on streaming services to be more forthcoming about whose work is rewarded by the algorithms that streaming services use to select music to present to users.
Garcia del Blanco stressed he wasn’t singling out Spotify – “there are many more examples” – but did mention TikTok by name, noting that it is creating “a new way to listen to music,” and describing TikTok’s business model as “impoverishing.”
The expected proposals will be “intrusive in this market” because “it is the most unbalanced sub-sector of the cultural sector right now,” Politico quoted del Blanco as saying.
In his efforts to increase royalties to artists, Garcia del Blanco may find allies in two different corners: among artists’ groups, and among major recording companies, which themselves are hoping to see more generous payouts from streaming services.
“Most authors and composers are struggling to earn a living in the current streaming economy, as revenues generated by the market remain unacceptably low, despite the services’ ever-expanding reach, number of users, and quality of offer,” said a statement from GESAC, a group that represents European authors’ societies that collect royalties on behalf of creators.
“Moreover, the opaqueness and dysfunctionalities of music streaming services’ algorithms and recommendation systems give rise to a number of problems such as stream manipulation, fraudulent practices, fake artists, and payola schemes.”
In many respects, the concerns laid out by GESAC echo those of music recording companies, which have begun working to persuade streaming services to accept new business models, presumably ones that would be more generous to the recording companies’ artists.
Earlier this year, Universal Music Group (UMG) Chairman and CEO Sir Lucian Grainge sent a note to UMG staff calling for a new streaming model.
“What’s become clear to us and to so many artists and songwriters—developing and established ones alike—is that the economic model for streaming needs to evolve,” Grainge wrote in the note.
“There is a growing disconnect between, on the one hand, the devotion to those artists whom fans value and seek to support and, on the other, the way subscription fees are paid by the platforms. Under the current model, the critical contributions of too many artists, as well as the engagement of too many fans, are undervalued.”
“Most authors and composers are struggling to earn a living in the current streaming economy, as revenues generated by the market remain unacceptably low, despite the services’ ever-expanding reach, number of users, and quality of offer.”
GESAC
Other executives have made it clear that they see music as being underpriced compared to other forms of media and entertainment, and they’d like to see streaming services charge more.
“The price value of music is extraordinary when compared to other media products, especially other streaming media products – video, for example,” Warner Music Group CFO Eric Levin said at a media and communications conference last month.
The recent price hikes at a few streaming services – including Apple Music and YouTube Premium, were “long overdue,” he added, and said he hoped those moves would give streaming services the confidence to raise prices.
Spotify, the world’s biggest streaming music service, continues to offer the same $9.99/€9.99/£9.99 rate for monthly premium individual subscriptions in the US, UK and Europe’s biggest markets since it launched in those markets a decade ago.
Responding to the developments at the Culture and Education Committee in Europe, Olivia Regnier, Spotify’s Senior Director, European Policy, said she regretted that the debate on royalties began “from the premise that there is a regulatory gap to be filled, without asking what the problems are.”
Regnier told Politico that platforms have very little control over how much money ends up in the hands of creators, and noted that “none of the streaming platforms are profitable.”
In a study released in 2022, the UK’s Competition and Markets Authority (CMA) concluded that “neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators.”
“With an increasing number of artists, tracks and streams, the money from streaming is shared more widely – with those that have the highest number of streams earning the most,” the report noted. It found that more than 60% of streams of recorded music were of the top 0.4% of artists.
The UK government has since formed a “remuneration working group” with the goal of promoting fair pay for musicians and transparency of metadata in the streaming industry. It’s operating under Sir John Whittingdale, Minister of State at the UK’s Department for Culture, Media & Sport.
In a letter earlier this year, Whittingdale said that, while progress has been made on royalty rates in new contracts, many artists still have concerns about streaming rates paid in older contracts.
“While terms in new contracts are increasingly creator-friendly, those benefits are often not extended to creators still signed to older contracts, many of whom are paid at substantially lower royalty rates than their modern counterparts,” he wrote. “Additionally, session musicians feel that they are not sharing equitably in the successes of the streaming sector.”
Streaming platforms typically keep about 30% of revenue from subscribers and ads, and distribute the rest among rightsholders. And while many are seeing rapidly growing subscriber numbers, in many cases, that isn’t translating into profits.
In Q1 2023, Spotify saw paid subscriber growth jump 15% YoY to 210 million. In terms of profitability, the Stockholm-headquartered company posted an operating loss of €156 million.Music Business Worldwide
