DCMS rules out broadcast-style equitable remuneration for music

DCMS Minister Julia Lopez has said the government does not intend to apply the broadcast model of equitable remuneration to on-demand streaming.

In a letter addressed to DCMS Select Committee Chair Caroline Dinenage, dated 19 February, Lopez said the broadcast model, which would see musicians remunerated for streams the same way as they are for traditional broadcast transmissions such as radio, is “not a low cost or low risk fix to creator concerns”.

Lopez’s letter coincides with the publication of research commissioned by the Intellectual Property Office (IPO) on equitable remuneration, which concluded the mechanism “does not offer a simple solution to the streaming conundrum”.

READ MORE:

The research reviewed three variants of equitable remuneration, a ‘full broadcast’ model where 100% of streams are split 50/50 between creator and label, a ‘partial broadcast’ model where equitable remuneration is only applied to 35% of streams and a ‘Spanish model’, built on a right exercised in Spain which is paid for by streaming services or rightsholders.

The paper concludes that equitable remuneration “does not offer a simple solution”. It warns against the cost of administering such a model and notes that if equitable remuneration were to undermine return on investment from talent development, labels may reduce such activity.

“While not a satisfying conclusion, it is clear that more research is required into the nuances of how best to balance the incentives to create with the need to monetise creation,” the report concludes.

In her letter, Lopez says the report's findings “suggest that applying the so-called broadcast model of equitable remuneration to music streaming is likely to be extremely disruptive for the music industry with a high likelihood of damaging unintended consequences”.

She says consequences could include reduced investment in new artists and a reduction in choice for artists in how they negotiate with record labels and adds the risks “have been acknowledged by many in the industry, including labels and artists”.

In 2021, the DCMS Committee concluded a nine-month inquiry into music streaming with a recommendation that the government introduce “robust and legally enforceable” measures to give musicians a fairer share of streaming revenues. A bill to increase streaming royalties for signed musicians was tabled later that year, but was voted against after receiving a mixed response from the music industry.

In November 2022, the Competitions and Markets Authority ruled out conducting a full investigation into music streaming revenues, in a report responding to the DCMS Committee suggesting it investigated the dominance of major labels.

Industry-led action

Rather than adopt an equitable remuneration model, the government plans to progress with an industry working group that considers remuneration for existing and future creators.

In her letter, Lopez says the IPO-commissioned report’s findings “lend weight to the view that the best way to address creator concerns is through dialogue among industry and, where appropriate, industry-led actions”.

Her letter confirms government will establish an industry working group to “explore and consider industry-led actions on remuneration for existing and future creators”, a suggestion first made by the DCMS Select Committee.

The first working group is scheduled to meet in the coming weeks. Membership is yet to be disclosed but, according to Lopez, will be published “imminently”.

DCMS says its goals for the working group are to “help the music industry to find common ground on the issue of creator remuneration and to support our thriving sector to flourish and continue its success story at home and on the global stage”.