Second Report - Economics of music streaming

Select Committee
Culture, Media and Sport Committee HC 50 15 July 2021
Report Status Government responded
Conclusions & Recommendations 25 items (21 recs)
Source View on Parliament website
Government Response (AI assessment · 25 of 25 classified)
Accepted 3
Accepted in Part 4
Acknowledged 5
Deferred 9
Not Addressed 1
Rejected 3
Government response
Second Special Report - Economics of music streaming: Government and Competition and Markets Authority Responses to Committee’s Second Report · published 22 Sep 2021
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Recommendations & Conclusions

25 results
1 Conclusion Acknowledged
Streaming has undoubtedly helped save the music industry following two decades of digital piracy but...
Conclusion
Streaming has undoubtedly helped save the music industry following two decades of digital piracy but it is clear that what has been saved does not work for everyone. The issues ostensibly created by streaming simply reflect more fundamental, structural problems … Read more
Government Response Summary
The government welcomes the report, acknowledges that many creators are calling for reforms and that the streaming environment is complex, but states more targeted research is needed before deciding on specific actions.
Department for Culture, Media and Sport
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2 Recommendation Acknowledged
Para 46
We urge Universal and Warner to look again at the issue of unrecouped balances with...
Recommendation
We urge Universal and Warner to look again at the issue of unrecouped balances with a view to enabling more of their legacy artists to receive payments when their music is streamed.
Government Response Summary
The government acknowledges the issue of unrecouped balances and is launching work to better understand fairness in creator remuneration, assessing different models as part of its wider review.
Department for Culture, Media and Sport
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3 Conclusion Deferred
Para 58
The pitiful returns from music streaming impact the entire creative ecosystem.
Conclusion
The pitiful returns from music streaming impact the entire creative ecosystem. Successful, critically acclaimed professional performers are seeing meagre returns from the dominant mode of music consumption. Non-featured performers are frozen out altogether, impacting what should be a viable career … Read more
Government Response Summary
The Government welcomes the report and acknowledges the impact of poor remuneration on creators. It states that more targeted research and evidence are needed to fully understand the problems and potential solutions before it can decide on action.
Department for Culture, Media and Sport
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4 Recommendation Deferred
Para 69
The major music companies and independent record labels have consistently asserted that music streaming is...
Recommendation
The major music companies and independent record labels have consistently asserted that music streaming is straightforwardly ‘making available’, and therefore performers should be remunerated as though it was a sale. However, this classification does not consider the complexities of streaming … Read more
Government Response Summary
The Government notes the complexity and potential negative impacts of equitable remuneration, stating it will launch work to better understand issues of fairness in creator and performer remuneration and assess different models before deciding on action.
Department for Culture, Media and Sport
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5 Recommendation Deferred
The right to equitable remuneration is a simple yet effective solution to the problems caused...
Recommendation
The right to equitable remuneration is a simple yet effective solution to the problems caused by poor remuneration from music streaming. It is a right that is already established within UK law and has been applied to streaming elsewhere in … Read more
Government Response Summary
The Government notes the complexity and potential negative impacts of equitable remuneration, stating it will launch work to better understand issues of fairness in creator and performer remuneration and assess different models before deciding on action.
Department for Culture, Media and Sport
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6 Recommendation Deferred
Para 77
We recommend that the Government legislate so that performers enjoy the right to equitable remuneration...
Recommendation
We recommend that the Government legislate so that performers enjoy the right to equitable remuneration for streaming income. Amending the Copyright, Design and Patents Act 1988 so that the making available right does not preclude the right to equitable remuneration, … Read more
Government Response Summary
The government defers action on legislating for equitable remuneration, stating it is a complex area requiring further work to better understand impacts and assess different models, with an update expected in spring 2022.
Department for Culture, Media and Sport
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7 Recommendation Acknowledged
Para 88
Despite being an important part in the music creation and music streaming process, song rightsholders...
Recommendation
Despite being an important part in the music creation and music streaming process, song rightsholders are not effectively remunerated for their work. The Government should work with creators and the independent publishing sector to explore ways in which new and … Read more
Government Response Summary
The government agrees on the importance of song rightsholders and commits to bringing together industry representatives to discuss supporting songwriters and composers, to inform any future action.
Department for Culture, Media and Sport
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8 Recommendation Rejected
Para 94
Metadata issues compound the poor terms on which creators are remunerated.
Recommendation
Metadata issues compound the poor terms on which creators are remunerated. Whilst there is a significant challenge, it is not insurmountable. First, the Government must oblige record labels to provide metadata for the underlying song when they license a recording … Read more
Government Response Summary
The Government agrees on the importance of metadata but proposes to address it through improved awareness and engagement with technology businesses, not by obliging labels or mandating data standards. It explicitly rejects the recommendations on black box revenues, stating they are already regulated, and does not address the creation of a comprehensive musical works database or registration portal.
Department for Culture, Media and Sport
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9 Recommendation Accepted in Part
The licensing and royalty chains of song rights causes considerable confusion and complexity to the...
Recommendation
The licensing and royalty chains of song rights causes considerable confusion and complexity to the system, and songwriters and composers pay the price. There is no single solution to create more efficient and timely royalty chains but the Government can … Read more
Government Response Summary
The government rejects requiring publishers and collecting societies to publish royalty chain information, arguing it is impractical. However, it will convene an industry-led technical working group to agree on transparency standards and will consider global licensing deals in future trade policy.
Department for Culture, Media and Sport
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10 Recommendation Deferred
Para 111
There is no doubt that the major music groups currently dominate the music industry, both...
Recommendation
There is no doubt that the major music groups currently dominate the music industry, both in terms of overall market share in recording and (to a lesser extent) in publishing, but also through vertical integration, their acquisition of competing services … Read more
Government Response Summary
The government acknowledges concerns about market dominance but states the CMA is an independent regulator and it is for them to decide on a market study, though they have written to the CMA on the recommendation, without committing to making the referral itself.
Department for Culture, Media and Sport
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11 Recommendation Rejected
Para 122
The Government must make sure that UK law is not enabling the outcome of market...
Recommendation
The Government must make sure that UK law is not enabling the outcome of market dominance. This means that independent labels must be supported to challenge the majors’ dominance and creators must be empowered to offset the disparity in negotiating … Read more
Government Response Summary
The government rejects the recommendation to expand MEGS, place anti-acquisition clauses in grant funding, or introduce a fiscal incentive for the independent music sector, stating MEGS's remit doesn't cover structural issues and tax policy is the Treasury's responsibility.
Department for Culture, Media and Sport
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12 Recommendation Deferred
Para 123
We recommend that the Government concurrently expand creator rights by introducing a right to recapture...
Recommendation
We recommend that the Government concurrently expand creator rights by introducing a right to recapture works and a right to contract adjustment where an artist’s royalties are disproportionately low compared to the success of their music into the Copyright, Designs … Read more
Government Response Summary
The Government will commission research into the impacts of introducing rights to recapture works and contract adjustment, which will inform whether and how to implement them, with an update expected in spring 2022.
Department for Culture, Media and Sport
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13 Conclusion Acknowledged
Para 129
Despite the general consensus that direct licensing between the record industry and streaming services is...
Conclusion
Despite the general consensus that direct licensing between the record industry and streaming services is positive, there are ongoing concerns about the majors’ 106 Economics of music streaming position in negotiation, which allows them to benefit at the expense of … Read more
Government Response Summary
The government acknowledges concerns about the dominance of major music groups and has written to the CMA about the committee's observation, but states that it is for the independent CMA to decide how best to use its resources for a market study.
Department for Culture, Media and Sport
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14 Recommendation Accepted
Para 134
As long as the major record labels also dominate the market for song rights through...
Recommendation
As long as the major record labels also dominate the market for song rights through their publishing operations, it is hard to see whether the song will be valued fairly as a result. It is well-evidenced that redressing the disparities … Read more
Government Response Summary
The government states it has written to the CMA regarding the recommendation to consider how major music groups' dual position in recording and publishing influences song and recording rights value, acknowledging the CMA's independence.
Department for Culture, Media and Sport
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15 Recommendation Accepted in Part
Para 139
Artists and their representatives face a systemic lack of transparency from both music companies and...
Recommendation
Artists and their representatives face a systemic lack of transparency from both music companies and the streaming services that license their works. This exacerbates the inequities of creator remuneration by creating information asymmetries and preventing them from undertaking their right … Read more
Government Response Summary
The government accepts the need for improved transparency and will convene an industry-led working group to agree on voluntary standards; however, it rejects the recommendation to require publishers and collecting societies to publish full royalty chain information due to feasibility concerns.
Department for Culture, Media and Sport
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16 Recommendation Accepted in Part
The Government has repeatedly told us that it will not implement in UK law provisions...
Recommendation
The Government has repeatedly told us that it will not implement in UK law provisions akin to those established by the Directive on Copyright in the Digital Single Market. We accept that the Directive is not a silver bullet to … Read more
Government Response Summary
The Government acknowledges the need for transparency, stating the IPO will convene an industry working group to agree on voluntary standards for transparency, deferring legislative intervention only if this process is unsatisfactory. It rejects requiring publishers and collecting societies to publish royalty chain information, citing feasibility concerns.
Department for Culture, Media and Sport
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17 Recommendation Deferred
Para 151
Music curators play an important role in the discovery and consumption of digital music and...
Recommendation
Music curators play an important role in the discovery and consumption of digital music and are influential in how creators are remunerated. It is, therefore, unsurprising that music creators are putting more resources into catching the eye of these curators. … Read more
Government Response Summary
The Government agrees with the recommendation in principle but notes the complexities involved and states it will gather further evidence and carefully consider the case for intervention before proceeding with a code of practice.
Department for Culture, Media and Sport
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18 Recommendation Accepted
Para 153
Algorithms are fundamental to the operation of streaming services.
Recommendation
Algorithms are fundamental to the operation of streaming services. However, many questions remain about how they influence music consumption and how much oversight exists. The Government should commission research into the impact of streaming services’ algorithms on music consumption, including … Read more
Government Response Summary
The government accepts the recommendation, agreeing there is value in further research on streaming algorithms' impact, and will ask the Centre for Data Ethics and Innovation (CDEI) to lead this research.
Department for Culture, Media and Sport
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19 Recommendation Accepted in Part
Para 159
The market for streaming services itself is fiercely competitive.
Recommendation
The market for streaming services itself is fiercely competitive. However, there is the potential that companies may leverage other aspects of their business or elsewise use vertical integrations to gain a competitive advantage; indeed, some jurisdictions have considered that this … Read more
Government Response Summary
The Government launched its consultation on the new pro-competition regime in July 2021 and states it will legislate to put the Digital Markets Unit on a statutory footing as soon as Parliamentary time allows, fulfilling the intent but without a specific timeframe.
Department for Culture, Media and Sport
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20 Recommendation Accepted
Para 160
The Government must ensure that the challenges posed by music streaming to the UK’s prominence...
Recommendation
The Government must ensure that the challenges posed by music streaming to the UK’s prominence regime are duly considered.
Government Response Summary
The Government agrees with the recommendation and states it is duly considering the challenges to the UK’s prominence regime through its strategic review of public service broadcasting and the Digital Radio and Audio review, committing to act on Ofcom’s prominence recommendations through legislation as parliamentary time allows.
Department for Culture, Media and Sport
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21 Conclusion Acknowledged
Para 171
Safe harbour provisions that have been transposed into UK law have profoundly impacted the market...
Conclusion
Safe harbour provisions that have been transposed into UK law have profoundly impacted the market for digital music consumption. YouTube’s dominance of the music streaming market shows that the market has tipped. Safe harbour gives services that host user-generated content … Read more
Government Response Summary
The Government acknowledges that rightsholders should be properly remunerated and recognizes the difficulties faced, but states that licensing negotiations are private commercial matters and it has no intention of implementing the Copyright Directive. It notes the IPO has identified improvements to access to justice guidance and will consider KYBC obligations in an upcoming IP Crime Strategy.
Department for Culture, Media and Sport
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22 Recommendation Deferred
Para 172
We note that the CMA has developed a pro-competition framework for tech companies with ‘strategic...
Recommendation
We note that the CMA has developed a pro-competition framework for tech companies with ‘strategic market status’ that dominate digital markets. The CMA should consider exploring designating YouTube’s streaming services as having strategic market status to encourage competition with its … Read more
Government Response Summary
The CMA notes the recommendation to designate YouTube with Strategic Market Status, but states that the relevant pro-competition regime is still under consultation and the independent Digital Markets Unit will determine which assessments to undertake in the future.
Department for Culture, Media and Sport
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23 Recommendation Rejected
Para 178
As we have acknowledged, the Government has repeatedly told us that it will not implement...
Recommendation
As we have acknowledged, the Government has repeatedly told us that it will not implement the Directive on Copyright in the Digital Single Market. However, to ensure that music creators and companies prosper in the globally important UK music market, … Read more
Government Response Summary
The government agrees on fair remuneration but rejects introducing new legally enforceable obligations for UGC-hosting services, stating private negotiations are commercial matters and that it will not implement the EU Copyright Directive. It notes the IPO is reviewing access to justice for IP cases and will consider 'know your business customer' obligations in an upcoming strategy.
Department for Culture, Media and Sport
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24 Recommendation Deferred
Para 183
The debate between the predominant pro-rata payment model and alternative methodologies such as user-centric has...
Recommendation
The debate between the predominant pro-rata payment model and alternative methodologies such as user-centric has been compelling. It is positive that new services are inventing new and creative ways to address creators’ and consumers’ concerns about the fairness and transparency … Read more
Government Response Summary
The government notes concerns about potential market dominance and stifled innovation, but defers the decision to the independent CMA on whether to undertake a market study or specific investigation, stating it has written to the CMA regarding the recommendation.
Department for Culture, Media and Sport
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25 Recommendation Not Addressed
As technology continues to evolve, the Government must ensure that copyright law is fit for...
Recommendation
As technology continues to evolve, the Government must ensure that copyright law is fit for purpose and that appropriate mechanisms are in place for rightsholders to enforce their rights. The Intellectual Property Office must not be a passive witness but … Read more
Government Response Summary
The government's response focuses on the proposed Digital Markets Unit and its consultation, discussing SMS designation and pro-competitive interventions, but does not address the committee's specific recommendations regarding the IPO's active role, livestreaming remuneration, or actions against copyright infringement and emerging threats.
Department for Culture, Media and Sport
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