Copyright (Rights and Remuneration of Musicians, etc.) Bill

Graham Stuart Excerpts

Friday 3rd December 2021 Commons Chamber

[Andy Carter]

One of the great pleasures of coming into this House was meeting the hon. Member for Perth and North Perthshire (Pete Wishart). I remember, having worked in radio, hearing his songs on the radio, including “Loch Lomond” from his days in Runrig. I was able to go away and listen to his songs, and in fact I have some of them on my phone now, so having listened to him speak, I can listen to him sing as well.

[Graham Stuart (Beverley and Holderness) (Con)]

I know which is preferable!

[Andy Carter]

Absolutely. One of the great advantages of the internet is that it has opened up to us so many artists, some of whom were, I have to say, before my day. The internet allows such discovery to continue in a way that perhaps would not have been possible without it.

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[Dean Russell]

I thank the hon. Member for Swansea West (Geraint Davies) for making sure that I stay on track, as it were.

The reason I am saying all this is that I am trying to give an illustration of how people get into the music business. Some people may not necessarily be No. 1 pop stars on Radio 1 or at the forefront of everyone’s mind when we think about rock and roll or music streaming, but there is a huge weight of people who are fans—individuals or groups who are more at the edges. I have heard statements such as the following from the BPI:

“This Bill would bind British music in red tape, reduce income for the most entrepreneurial artists, stifle investment and innovation by record labels, and disproportionately harm the independent sector.”

That is why I am saying these things.

It is not just about streaming in the broad sense or the famous artists we have all heard of, including our fantastic colleague the hon. Member for Perth and North Perthshire. It is about the long tail of artists and the people who want to be able to access art—music is art. It is about a wide range of speakers, artists and voices. It is also about diversity and making sure that up-and-coming new artists can be heard in the next five or 10 years and that we have the right infrastructure in place in the UK to enable that and support them. My concern about the Bill is that, noble as its goals are, it risks having an inadvertent impact that may not deliver on that aim. That is why I tell these stories; I assure hon. Members that it is not about trying to speak for the sake of speaking.

[Graham Stuart]

We might expect the major corporations and music labels to say that the Bill would affect their ability to invest, but that does not necessarily mean that it is not true. Having already seen the market share of UK artists reduce over recent years, we really need to get the balance right, understand the dynamics of the system and proceed. We are all grateful to the hon. Member for Cardiff West (Kevin Brennan) for giving us the opportunity to discuss the matter and look at it very carefully.

[Dean Russell]

I thank my hon. Friend for that valuable contribution.

If I may jump ahead again, I have been very involved in radio. I had my own show called “Dean’s Poetry Show”. It did not have the most inventive of titles, but I played all sorts of music on it, from Frank Zappa to John Lennon and even Max Bygraves—hon. Members may remember “Show Me the Way to Go Home”, which is what many may wish to do at the end of this speech—right through to contemporary bands such as Oasis. I found out about the complexity of the industry and of the reasons why people get into music and want to be performing artists.

Off the back of the radio show, I set up an acoustic night. I found that there are lots of people who just enjoy doing music. They do not necessarily want to be at the top of the charts; they just want to be able to spread their music to as wide an audience as possible. I remember learning the guitar at the time and really getting into the mechanics of the artistry. We have to ensure that whatever the outcome of today and whatever the Government do, we continue to inspire people to pick up a guitar, to learn the piano, to be able to use the new techniques available.

I will come to digital in a moment. On an iPhone or an iPad it is now possible very quickly to create a song and put down our thoughts, with tools such as GarageBand. We can do things that perhaps were not possible just a few years ago, but that means that the opportunity for people to be musicians has grown exponentially. We need to make sure that that exponential growth is not limited by our approaches to Bills, legislation and guidance.

I feel like the privileged position of being MP for Watford was a calling for me, because Watford is such a creative space. Over the past few years, I have had the good fortune to see that culture and art up close. Watford has the Colosseum, which has done recordings for films such as “The Lord of the Rings”—really incredible pieces that have been heard around the world by millions, if not billions, of people. There are also brilliant small locations such as The Horns, which has regular bands and a lot of fantastic cover bands. The LP Café is a celebration of vinyl, where people can try to find music on their own time, having a nice coffee while exploring new types of music; this often ties into the artwork as well. There are also nightclubs such as PRYZM and others, where people can just go and have a drink, and enjoy the music for what it is. The key thing is that music ties across so many areas. My worry with the Bill is that we might end up unintentionally limiting that ability.

AIM has recently said:

“We have expressed our concerns and are open to reviewing and discussing them with all stakeholders to figure out the best way forward. Legislating before this is reckless.”

That comes back to the point about understanding diversity.

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[Esther McVey (Tatton) (Con)]

I begin by paying tribute to the hon. Member for Cardiff West (Kevin Brennan) for his tireless work to bring this Bill to the House and, more broadly, to raise the profile and significance of the rights and remuneration of musicians in Parliament and beyond.

How do we get there? How do we get those rights and remunerations for our musicians and creatives? How do we ensure a fair payment for artists in this age of streaming? First off, we should acknowledge that streaming has completely changed the economics of music, and understand too that streaming saved the music business. It made it convenient once again for people to consume music legally, rather than through illegal file sharing and copying, as many hon. Members have talked eloquently and way too knowledgeably about today.

The idea of every single song being legally available in one place is quite incredible. It is now commonplace, but it was a brave and innovative vision and move from Daniel Ek, Spotify’s founder, back in 2006. Streaming has significantly broadened access to music. There were 100 million new music subscribers in 2020, taking the total to 467 million, whereas back in 2015 it stood at 76.8 million. Each one of those subscribers is paying on average £120 a year, so we can see the growth and the enormity of streaming. Yes, it has revolutionised the industry, but it is worth a significant amount of money that needs to be fairly distributed among the writers, creatives and performers.

My focus today, however, is on these needs that must be addressed: the power imbalance between the artist, the record company and the publisher; the conflict of interest between the major publishers and the record companies; and the lack of transparency in the industry. Let us look first at the relationship and interplay between the three major record labels, which hold the master recordings, and the control they have over the three major publishing companies, which hold the song copyrights.

The three major record companies, Universal, Warner and Sony, own the three largest publishers, Universal Music Publishing Group, Warner Chappell Music and Sony Music Publishing, respectively. Obviously, concerns are raised about how those three publishers can advocate for songwriters’ interests if they are being controlled by their parent companies.

As a guide to how the revenue from music is split, the typical income earned by a master holder is about 80% and the typical income earned by a publisher is about 15%. Given that the major record labels own the publishers, it is in their interest to push for the income received on the master-sale side to be greater than on the writers-publishing side. The record companies, not the publishers, also do the deals with the digital service platforms so they can take the lion’s share of royalties from those songs.

To add to that, if hon. Members can believe it, there is even an imbalance in the speed of the payment. The record companies are paid much faster than the publishing side, because they control the supply chain. They take payments through an automated process, while the publishing side is paid through a more cumbersome manual process. Those imbalances, and the further imbalances that run from them, should be the focal point of policy makers and industry scrutiny.

I welcome the Government’s intervention in referring the matter to the Competition and Markets Authority. I have a couple of other helpful suggestions that might go some way to improving the relationship between artists, record companies and publishers. Songwriters and artists should have a direct seat at the table in the remuneration discussions and should be represented by their peers, not the record labels or publishers.

A music stream should be treated as a licence, not a sale. A licence gives the artist 50% of the royalties for a song, whereas a sale gives them between 18% and 30%. Since streaming became the main mechanism for consuming music, record companies have unilaterally decided that a stream should be considered a sale, because it maximises their profits. Artists and songwriters need to update clauses in their contracts to reflect the true nature of how their songs are consumed, which is via a licence.

Clarification also needs to be introduced to the grey area of breakage in record companies and digital service providers. A streaming is not included in any detail in most agreements and breakage is not subject to a contractual method of distribution. Confirmation is needed that all income gained in that way by major record labels is distributed fairly and appropriately. Some have even suggested a kitemark.

On the lack of transparency, for an artist to understand their payslip or royalty statement, they need to be shown two key things: how many units they sold and how much each unit sold for. If an artist wishes to inquire about the real level of sales, they will need an audit which, at the moment, is incredibly expensive and can take about 24 months to book and complete. That is not how payslip querying should be. The artist never gets to see the total amount that has come in. An online seller of goods would know the gross amounts and what needed to be deducted for services and commission, but that is not the case in the music industry. That needs to be changed.

In a final twist, if an artist manages to get their books audited to see what is coming in from the streaming service, should they ask for back-up information—in the old days, they could get the cost of CDs and how many copies were sold—in this instance, from streaming, that is covered by a non-disclosure agreement that removes the right to see how the money flow comes in, because companies say that it affects their ability to be competitive. Such things need to be changed.

Writers and artists are businesses, entrepreneurs and inventors who have created a product. We have to be on the side of those creatives and musicians, because they deserve their full dues. As the hon. Member for Sunderland Central (Julie Elliott) rightly pointed out, covid shone a spotlight on the area. In the past, artists could go out and earn extra money by performing at live events, but they could not in covid. They relied more heavily on what was coming in from streaming, but there was nothing there to rely on. Many of them have been left without income for a considerable period, and have therefore turned to the state for support.

It would be remiss of me, as a former Secretary of State for Work and Pensions, not to ask this question. Why should the taxpayer pick up the bill for the international giants who are not paying their contributors, creators and writers correctly? That is wrong. We might have needed to provide some extra money through universal credit, and that would be right, but these international companies should have paid their way and not asked the British taxpayer to pay those wages on their behalf.

There are many reasons—and I say this from a Conservative point of view—why we have got to get this right. These are points of principle. We do not believe in monopolies controlling an industry; we do not believe in supersized entities at all, whether they are the state or giant companies, and nor do we believe in imbalances in negotiations or conflicts of interest. However, we do believe in a fair deal for the taxpayer, and for the Exchequer too—money should be coming into the Exchequer to pay for all the public sector services that we need—and we believe absolutely in the rights of the individual. We need to stand up for these people.

It has been argued that the record companies must spend vast amounts of these artists’ money to pay for new artists. That is questionable, if not risible. Any other business that saw such a failure rate in the new products it was bringing to the market would look at its business model and ask, “Are we getting this right?” That is particularly relevant in an age when we can spot a star by looking at the number of followers on Instagram, YouTube and various other platforms.

Moreover, the companies are reducing the money of artists who have done well. They are spending the money of artists to whom, I would say, they owe a duty of care because they have contracts with them—contracts on which they embarked on a potential, hopeful, going-forward basis. Surely the artist to whom they owe that duty of care must come before the potential artist.

I would also throw in an auditor for these companies’ books. If they are reducing profits from their artists, on their own books, that means that they are reducing the amount of tax that they pay to the country.

[Graham Stuart]

My right hon. Friend is making a brilliant speech, but I am less convinced by that last point. The system does work on the basis of “blooding” a vast number of artists, and there is no business model in existence that can accurately predict who those people are. I take on board many of the points that my right hon. Friend made so well earlier in her speech, but we need to ensure that the funding and the machinery are there. The hon. Member for Perth and North Perthshire (Pete Wishart) said he accepted the model whereby they invest so that one’s artistry can reach a market. If we break that, we break the future for a young British artist, and we do so by rewarding the giants of yesterday who might want more money today. We do not want to cut off the future for the artist who wants to make it tomorrow.

[Esther McVey]

I do not have everyone’s company accounts, but I have been looking at those of Warner Music Group, and in particular at the amount that it is spending on what are described as

“Artist Repertoire costs as a proportion of recorded income”—

the money that it is investing in going out to find those new artists. I note that in 2017 the figure was 31.92%, and I am sure my hon. Friend will be surprised to learn that it went down in 2018, 2019 and 2020, to 30.13%. The amount that Warner Music Group says it is investing has gone down. As I said earlier, should these companies wish to identify an artist who could flourish, it is much easier to do so than it was 10, 20 or 30 years ago: they can see what an artist’s following is online.

I end with a couple of questions for the Minister. Will he update the House on what is happening with the Competition and Markets Authority? When will we know the decisions and conclusions? Could he refer the legal contracts and this conflict of interest to the Law Society for investigation? It is time the record companies recognised the unjustifiable imbalances between the revenue they receive and the revenue received by artists, and adjusted their models to better account for the growing popularity of streaming services. For that reason I will be supporting the Bill today.

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[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)]

It is a great pleasure to be here today. Is not this a wonderful example of what Fridays are for—a proper cross-party debate that tackles a serious issue? I pay tribute to the hon. Member for Cardiff West (Kevin Brennan) and the Select Committee for their substantial report in the summer; I assure them that I and officials in DCMS and the Department for Business, Energy and Industrial Strategy have read it carefully. Indeed, it is because of that report that we are having this debate today.

I pay tribute to all colleagues who have spoken so far. I know that more want to speak, but I wanted to take this opportunity to set out the headlines of the Government’s response for Opposition Members before they decide to respond. I cannot pay tribute to everyone who has spoken, but I particularly want to mention: my right hon. Friend the Member for Maldon (Mr Whittingdale), who is a former DCMS Secretary and was a distinguished Chair of the DCMS Select Committee, whose comments were important and well noted; and my hon. Friend the Member for Warrington South (Andy Carter), who demonstrated his experience in the industry. I also thank a whole range of voices to which I have been listening carefully. The tone of the debate has been extremely welcome, and I pay tribute to the hon. Member for Cardiff West for bringing the debate to the House in that way, with this level of cross-party engagement. It is all to the good and this is what the public expect us to do on a Friday in private Members’ business: come together and tackle key issues.

I am responding on behalf of the Government as Minister for Innovation at the Department for Business, Energy and Industrial Strategy, and Minister for copyright and intellectual property, which is what the Bill before us actually amends in law. I am here as a member of a Government who are taking this issue seriously, especially through my Department working closely with DCMS.

One of my primary responsibilities is for innovation across Government, so I want to put this issue in the context of the broader opportunity for digital innovation in the economy, including through the deep digital technologies of AI, quantum and such technologies, which I am looking to support through our science and innovation budget. We should also look at this issue with reference to the role of important digital clusters—the gaming community and others—that are driving innovation in medical technologies and a whole range of other parts of our digital economy. Indeed, earlier this summer, I took the Big Tent Foundation to Coventry, where we were joined by the Secretary of State for BEIS, to celebrate the work of the often unseen digital entrepreneurs in the gaming cluster, who are not often seen in the newspapers, but who are driving huge investment, innovation, and opportunity for people to engage in the digital economy.

It was for that reason that yesterday at the levelling-up Cabinet committee, we had a long conversation about the importance of the digital creative sector in supporting opportunities around the economy. Many of our now most celebrated digital and technology clusters started with strong cultural, artistic and musical elements. In fact, silicon valley started in the ’60s as a home for non-conformist, free-thinking, fresh-thinking entrepreneurs, before the term was really widely understood. It was the lifestyle, the surfing and the music that laid the foundations for what is now the world’s greatest technology cluster. Similarly, in Cornwall we are seeing the merger of lifestyle and recreation tech entrepreneurs linked to surfing and music. Music is not just in a silo.

I am also here in a personal capacity. My family has substantial interests in the industry, although I am not declaring commercial interests, as I have none myself. My brother works in the film industry, where people are better paid. It is a bit feast or famine. When there is a film, people tend to get paid pretty well, and between films it is a bit famine-ish—but they are paid well in general. My wife is a theatre director. People in theatre are paid rather less well than in film, although many of them sometimes work in films, if they are lucky.

In our house, we have a lodger who is a family friend. He is a nocturnal entrepreneur —I see him only at the beginning and end of the day—and I asked him the other day, “What are you doing upstairs?”. He is a digital music entrepreneur, making music at night. I asked him how the streaming sector is working. His response was very interesting and I want to share it with the House, as he said: “If it wasn’t for Spotify, no one would know me. I’m using the streaming platform to get noticed. I don’t make any money out of it, but what happens is that people then pick me up on TikTok, they pick me up on Instagram, they then reach out and message me.” He said, “I’m now selling cassettes”, at which point I looked at him! I am old enough to have had a collection of cassettes—indeed, when I bought my last car but one I was worried that there was not a cassette player and what I was going to do with my old cassettes. Then I had the same problem with my CDs. I looked at my lodger and said, “Cassettes?” and he said yes. As colleagues around the House more knowledgeable than me have highlighted, there is now a huge market in cassettes, as indeed there is in the renaissance of vinyl.

My lodger has used the streaming sector to create a footprint for himself, but of course what he really wants to be able to do is fill venues. When I asked, “Could you fill a venue here in London?” he said, “I could half-fill one in London, but I could fill 10 venues in Los Angeles.” I think that speaks volumes about the level of global digital entrepreneurial activity going on in this country—of course, the pandemic has robbed many of our musical artists of those venue-related, event-related incomes—and highlights a lot of the issues that the Select Committee has rightly brought to the fore about the impact of the level of digitalisation in the music industry.

My headline message is that we in Government want to view this area as a creative industries ecosystem, and make sure that Britain is the best place in the world for musicians to practise, innovate and create, recognising that we are in an incredibly competitive global environment; nobody wants to pass a well-intended law that inadvertently undermines the UK’s position as a leading centre. In this debate, we need to think about the artists—in this case, the musicians—and the labels and the platforms, as well as the relationships among those three in creating a functioning, vibrant, innovative and, indeed, profitable ecosystem in which revenues are distributed fairly and in a way that leads to UK leadership.

My commitment, on behalf of the Government, is that we will take this moment, with the report and this very well presented Bill, to do what many in the House have urged us to do, which is to look quickly—not to delay, but to look quickly—at all of the issues and the impacts, and make sure that we frame a Government response that does not just deal with the immediate issue today, but means that our successors in this House in 10 or 20 years’ time say that this Parliament got it right and tackled it in the right way.

That is really about, yes, fairness. Fairness is an important word, and I think an important value that most people listening to this debate, who may not understand the complexities—and, boy, there are many—of the modern digital music streaming ecosystem, understand. People understand that fairness does not mean everybody being paid the same amount every day, which tends to lead to a communist society in which very little is to be distributed. Fairness means that people are rewarded properly and appropriately for their part in an ecosystem, reflecting the role of others and of competition. It is also about making sure that the UK remains a powerhouse in the global digital ecosystem, and in particular that our musicians, on which this Bill focuses, are properly rewarded.

I want to highlight that “musician” is one word but covers a multitude of different people—singers, bands, DJs, instrumentalists, non-featured artists, session musicians, backing singers, lyricists and composers. There is a huge range of people, and before we legislate we just need to be cognisant that we will be legislating to shape their lifestyles and their livelihoods. It is part of my responsibility as a Minister to make sure that we listen to all of them, even those who are not so noisy, and make sure that, before we change the law, we are cognisant of any unintended side effects. We need to make sure that all musicians are benefiting from the UK legal framework, and not just be pushed by one group without being cognisant of the effects on others.

I also want to highlight—indeed, I did not know this before preparing in the last two or three weeks for this debate—how musicians actually make their money. If we look at the data, we see that, at 31%, live performance is the main revenue stream. That has of course been hit very hard by the pandemic, which is what has brought this issue to the fore. Then there is teaching of music at 9%, audio streaming royalties at 6%, physical sales at 5%, digital sales at 5%, sessional orchestral work at 5%, broadcasts at 5%, public performances at 4%, commissions for stage at 3%, merchandise at 3%, video streaming royalties at 3%, and a whole raft of others. The truth is that there are multiple revenue streams for most musicians, and some of course only receive some of those, but we need to be cognisant of the broader musician revenue stream, and indeed of how complex it is, before we legislate.

When a song is streamed on a service such as Spotify, revenue from that stream flows through a streaming value chain that has taken shape in the past few years. At the start, the streaming service takes its cut, which is typically around 30%, although there is no industry standard, and the rest is split among all the other parties back down the supply chain. People’s ability to negotiate depends, of course, on their strength in the market. I dare say that if I produced a piece of music, my negotiating power in the market would be very weak, whereas the band led by colleagues here in the House have established that they have an audience and a market. I pay tribute to their work in not only using those revenues to support charities but in highlighting issues in the House.

It is and should be a competitive market. I think we would all accept, as people who make their living on their feet, speaking to issues, that if we went to Hyde Park corner, some of us would attract bigger audiences than others. I do not think we would pass a Bill that compelled the public to listen to us all for the same amount of time with the same level of interest. We cannot legislate for that and we all know that. We do, though, want to make sure that successful artists who generate quality music are rewarded properly.

We accept that there is a problem and we accept the fundamental case made by the Select Committee. We have already started by launching the Competition and Markets Authority. The industry is very vertical, if I can put it that way, and we want to make sure that the revenues flow fairly and there is no anti-competitive practice. We are also looking, through the Intellectual Property Office, at how other countries have done it: there have been a number of reforms around the world and we want to be sure that we have collected the data on any reforms that have worked positively for musicians across the board and on those that have had negative effects.

In the past two weeks, I have had extensive meetings with the hon. Member for Cardiff West, in a positive spirit, and with colleagues on the Government Benches, including my right hon. Friend the Member for Tatton (Esther McVey), and around 40 or 50 other colleagues who have taken interest. I have also taken the time to meet people in the industry.

Before colleagues decide how they wish to proceed, they should know that views are very mixed. I have had 50 submissions this week that I was reading late last night. The Association of Independent Music accepts the Select Committee’s case that there is a problem, but does not accept that

“the solutions this Bill proposes will lead to the outcomes its supporters hope for—and the Bill risks damaging independent music”

by making

“the UK a less attractive place to invest and record”.

The British Phonographic Industry said:

“The Bill is premature in rushing to a legislative solution before the market impact…has been properly explored”.

We have had submissions from a huge range of hugely creatively and entrepreneurial UK labels. I will not even begin to read out the whole list, but I have here a letter with at least 20 logos on it. In November, a group of them wrote to the Prime Minister: “We are writing as a group of British independent record labels concerned about the unintended impact”—I do not think anybody has any doubt about the intent behind the Bill or, indeed, the Select Committee’s work behind it—“on our industry of the copyright Bill that is due to be debated in the House”. They urged us not to accept the Bill quickly as it is written but to take it as a spur, as the hon. Member for Cardiff West himself urged, to do the necessary research.

Jeepster Recordings, which is based in Hackney, wrote to the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) to say:

“I am writing to you from Jeepster Recordings in Stoke Newington. We are an independent record company based in your constituency. We began in 1996 and have a very small creatively successful back catalogue which includes the early Belle and Sebastian and Snow Patrol albums…We have deep concerns about the impact of this Bill on the future of our business and feel that there are parts of it that, if approved, will destroy a business we have managed to keep going for 26 years…As with a lot of small labels, we invested a large amount of money in our artists and struggled as a company at a financial loss for several years whilst promoting them in a market skewed in favour of the major labels”,

which is the point that the Bill seeks to tackle.

We are keen to make sure that we get this right and pass a piece of legislation, if that is what it takes, or work with the Competition and Markets Authority to put in place the right measures to make sure that the industry—the labels—respond in the right way. Ultimately, before the long and slow process of legislation, we would like to find an industry solution, if we can, which is why we have brought together a series of working groups with industry to start to put feet to the fire and ask some hard questions about what they are doing to make sure that we properly remunerate artists.

[Graham Stuart]

There is huge interest and real concern across the House about getting this right. Often the House comes together like this on an issue, but then somehow in the Government it goes into the sidings. Can the Minister reassure all colleagues across the House who want to see action that he and the Government are committed to taking it forward energetically?

[George Freeman]

I am grateful to my hon. Friend, a distinguished Back Bencher and former Minister, for raising that point. I myself have had private Members’ Bills, including ten-minute rule Bills, adopted by the Government; I have withdrawn them on the basis of an undertaking from the Minister. I have spoken to the hon. Member for Cardiff West, and obviously I understand that he wants to make his point, but I ask politely at the Dispatch Box, for the record, whether he might be prepared to withdraw the Bill today, work with me on tackling the measures in it, and bring it back in due course if he feels that the measures that I have put in place are inappropriate.