Sharing in the streaming boom and lump sum mega-payments

5 min readJan 13, 2022

Sharing in the streaming boom and lump sum mega-payments

Following the new year BPI statistics about the successful growth of recorded music throughout the pandemic, I was interested to read a piece last week by Lord Vaizey, a former Minister of State for culture and the digital economy for The Times about the state of the UK record business.

Despite a strong headline (“A dated understanding of the music industry is holding us back”) the piece actually came across as directed at a small interest group of public policy experts, trade bodies and commentators rather than the newspaper’s general readership.

Effectively, it makes the following points: as a result of streaming, the UK’s record business now exists within a complex online global marketplace; the control of major record labels has diminished accordingly (43.1% of the market being controlled by independent labels and other “service providers”); and that the increase in competition has resulted in a fundamental challenges to the previously unrivaled dominance of UK talent.

Because of this combination of factors, regulators at the Competition & Markets Authority (CMA) should therefore tread carefully in their upcoming investigation of the UK’s recorded music market. 2020, Lord Vaizey notes sagely, was the first year in history that a British act failed to appear among the IFPI’s top ten best-selling acts in the world.

In truth, these stats are unlikely to be indicative of global trends, but simply a reflection that neither Adele or Ed Sheeran released new albums in 2020, and no major catalogue projects were announced by The Beatles or Queen. The situation is likely to be rectified in 2021 following the successes of “30”, “=” and “Get Back”.

Anyway, the clear inference being made is that regulators should not interfere or rock the boat. Coincidentally, this is also a view shared by lobbyists for the record industry.

What’s conspicuously absent from the narrative is 2021’s elephant in the room: the ongoing and egregious failures of the music industry to properly share the growth in streaming with artists.

Following a year of extensive investigation by the DCMS Select Select Committee, I think all people involved in this debate agree that streaming is a wonderful thing. They also acknowledge that the globalised dynamics of online music distribution have opened up all manner of opportunities to artists (especially artists from outside the UK) and that those artists now have many more routes to market than when Lord Vaizey held ministerial office.

However, what many do have an issue with are outdated licensing and contractual frameworks that favour and overcompensate major labels at the expense of artists, songwriters, producers and musicians – the vast majority of whom are not sharing equitably in the ongoing streaming boom.

In fact, when considered alongside recently published analysis from MIDiA, that found a substantial proportion of the labels surge in 2021 online revenues could be attributed to “large one-off payments [and licensing income] from the likes of Bytedance, Twitch and Facebook”, these market dysfunctions currently look even more acute.

Despite the recorded market share of the three major labels falling to 56.9%, when it comes to licensing negotiations it appears they continue to extract unfeasibly large slices of licensing revenues in the form of these upfront unattributable payments – typically with little transparency about the sums involved, and how or if any of the revenues will be allocated to artists. With so much of the “digital pie” consumed as part of label negotiations, the artists signed to those labels – not to mention those entities who represent the other 43.1% of the recorded market – are left competing over crumbs.

Such practices might reflect the world as it was ten years ago, when major record labels wielded greater influence and artists had fewer options in distributing and financing their music – however, they do not reflect the world now. The majors can not continue having their cake and eating it.

As the MMF have consistently advocated in our Dissecting The Digital Dollar publications, and in submission after submission to Government with the Featured Artists Coalition, it’s now high time for significant changes in how streaming services are licensed and how artist contracts are constructed. While we welcome and encourage progressive changes from within the music industry, such as Sony Music’s decision to disregard unrecouped balances for artists signed before 2000, it increasingly feels that legislation will be required to ensure the necessary changes are delivered. With around 70% of current music consumption, and therefore value, coming from catalogue, the deals those artists were signed to are material in assessing the fairness of streaming. The existence of a more competitive market for new signings does not negate this.

Lord Vaizey is absolutely right that the CMA must acknowledge recent evolutions in the market, the impact of emerging digital services and the globalised dynamics of streaming. But it is even more vital that they and the UK Government which is currently investigating the issues with the market, can understand the litany of outdated practices that have not kept pace with these changes. This will need to be rectified if the UK music business has aspirations to be the best in the world.

Written by Annabella Coldrick