Artistic Remuneration for Online Content

Debate between Jim Shannon and Kerry McCarthy

Wednesday 6th July 2016 Westminster Hall

[Kerry McCarthy]

I totally agree. A few years ago I went into BPI’s offices and the staff there showed me the impact of illegal downloading on record sales, using Adele as an example. It was quite startling to see, by the second, how many hundreds if not thousands of illegal downloads there were. I said to them, “Yes, that does make a certain point, but I want to see what impact it has on the income of a struggling indie band that is on the verge of breaking through.” It would be easy for people to say, “Well, Adele is selling millions.” Yes, she is clearly very wealthy and perhaps can afford for people to access her content for free, but it is the principle, is it not? That principle should apply across the board. I have always said that it is up to artists whether they want to make their content free. If they see that making their content free online is a good move for their career, that is their choice, but it is equally their choice to be paid if they want to be paid, and people should not download illegally.

Going back to the legal streaming services, if we are to secure the future sustainability of the sector and encourage vibrant new acts to come forward, it is vital that artists can earn a decent living in the digital environment. The problem will only become more acute in the years ahead, as digital music revenues will continue to outstrip those from physical formats such as CDs and vinyl. There is a bit of a vinyl revival, but that will always be a niche area. It is illustrative that when I was talking to my teenage and early twenties nephews and nieces the other day, I found that they had never bought a CD. I think it is on the verge of becoming a redundant format.

There is an issue about how Spotify calculates payments to rights owners. It is too complex to go into detail about here, but it means that the money that we as individual consumers pay for streaming does not directly go to the bands and artists we are listening to the most, and it penalises bands with strong fan bases.

The primary cause of the problem that artists face with streaming royalties, though, lies in the contract that they have with their record label. Those contracts continue to pay artists royalties for streaming as though the stream were a physical sale of a product. They are continuing with a royalty rate from the pre-digital era, so things such as the manufacture, storage and distribution of a physical product such as a CD or vinyl album are factored into the contract. That simply cannot be justified when there is no physical product on the market.

[Jim Shannon (Strangford) (DUP)]

Is not the case that the artists now have to accept that they need to be part of the digital streaming process whether they like it or not, and perhaps be dragged screaming and shouting into a new age where they do not want to be? That is the information that I am getting back.

[Kerry McCarthy]

It is always the choice of an artist how they want to market their product. Some artists are quite happy to do it on a part-time basis and just put their stuff on SoundCloud or whatever, or are happy just to be on the live circuit. It is clear that online content and streaming services are the future of the industry, but my point is that at the moment the musicians get only about 10% to 15% of what the label receives from the streaming service, because the physical cost of a product is built in. There are some contracts that are far more favourable to musicians, but by and large they are not, which the Musicians’ Union has been campaigning on.

In almost all cases, an artist will never see any of the online royalties at all, as their contract sweeps up the rights they have to royalties from the sale of recordings until they have paid back the advance they received from the label and any expenses incurred recording and promoting the artist. I argue that a fairer split of 50:50 would seem entirely reasonable, especially as this already exists for public performance and broadcasting income thanks to the equitable remuneration right. The Musicians’ Union has argued that when performers transfer their assailable rights, 50% should be a non-assignable equitable remuneration right, with the other 50% being an exclusive right assignable to the record company, to ensure that performers receive income from digital sales and streaming whether or not they still have an outstanding balance with their record label. For their part, record labels would be able to recoup their investment from royalties assigned to them under the exclusive right.

The Fair Internet for Performers campaign is taking this issue forward Europe-wide by campaigning for an amendment to EU copyright legislation. The hon. Member for Selby and Ainsty has already mentioned what the impact of Brexit would be and whether in a few years’ time we would be free to set our own rules. I would be grateful if the Minister clarified where we are in the limbo years, as we might call them. Will we adopt the EU copyright legislation as national legislation? Does he regard the EU legislation as a practical way of adequately rewarding artists in the UK for the streaming of their recorded performances?

It is vital to ensure that income streams actually reach creators, to ensure not only that performers can make a living from their art, but that corporations continue to have that talent to exploit, and for the future of new music and art, which I think all of us in this room would agree is incredibly important.