The three major music labels operate ‘like a cartel’ in the streaming age and the current system threatens the future of music in the UK, according to evidence provided on the first day of an investigation into the impact of music. streaming on the music industry.
During the Digital, Culture, Media and Sport Special Committee’s inquiry into the economics of streaming music, MPs heard from musicians such as Radiohead’s Ed O’Brien, Guy Garvey of ‘Elbow and Tom Gray of Gomez, who painted a grim picture of artists struggling to survive.
Garvey said that “the system as it stands threatens the future of music,” while fair compensation, increased transparency and user-centric streaming models have been touted as ways in which the he industry could be reformed and made fairer to artists.
Gray, who is the founder of the #BrokenRecord campaign, said some artists were still tied to contracts that included outdated clauses, such as a 10% damages clause, which saw labels work on the assumption that 10% of CDs would be broken in transit.
An artist’s share is then calculated on the remaining 90%, despite the fact that in the age of streaming almost no CDs are sold. Tom Frederikse, lawyer and former producer, who also testified, said that in some cases the damages clause was as high as 25%.
“What is very clear is that over 70% of consumers think artists are underpaid. As soon as someone sees this data and learns the terms of the payment agreement, everyone comes to the same conclusion: it’s not fair, ”Gray said.
After hearing the evidence, MP Julie Elliott said it seemed the three major labels – Warner Brothers, Sony and Universal – were operating “like a cartel” because of what Gray called “weirdly similar artist contracts”. “.
Gray referred to a recent YouGov poll which found that 77% of customers believed artists weren’t getting a fair deal, and reports that Universal recorded $ 1.14 billion in revenue in the last quarter despite the global pandemic and economic recession.
MPs have heard that the huge profits seen by the big labels are not trickling down to artists who, in the case of Nadine Shah who also testified, struggled to make ends meet in the streaming age. Streaming was worth around £ 1billion last year, however, artists are said to have only received 13% of the revenue generated.
The musicians said artists need to adapt to a streaming model that quickly replaced the system that existed when they signed on.
O’Brien said that when Radiohead was signed in 1991 there were huge imbalances but the age of streaming exacerbated them. “It’s interesting to see your reaction to the testimony this morning because you realize the inequity and the opacity within the company, and then you hang on to this digital model. And it doesn’t work, ”he says.
Garvey said Elbow recently shortened a track’s intro so that it was more likely to appear on playlists. Gray told the committee that genres such as jazz and classical were struggling because their longer tracks didn’t fit the playlist system, which he said was good for listening and muzak.
Gray also told the committee that he had heard of cases in which people who broadcast influential playlists on streaming platforms were paid to include tracks, calling it a modern form of “payola.”
The investigation is continuing and will hear “the views of industry experts, artists and record companies as well as the streaming platforms themselves.” Chairman Julian Knight MP said the aim was to question whether the business models used by major streaming platforms were “fair to the writers and performers who provide the material.”