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

Debate between John Whittingdale and Joy Morrissey

2nd reading
Friday 3rd December 2021 Commons Chamber

[Mr Whittingdale]

Of course, we depend on the talent in this country. Some of our most globally successful artists—people such as Adele and Ed Sheeran—come from the UK, and I must say that they do extremely well. Part of my criticism of the measures proposed in the Bill is that they will result in those artists who get streamed most doing a bit better, but those artists who do not get that many streams will not get much more money. One million streams sounds like an awful lot, but, in comparison to CD sales, it is not very much in terms of revenue generated for rights holders from digital service providers. I will come to that in detail.

The hon. Member for Foyle (Colum Eastwood) is right that, in a sense, what kept the industry going while revenues from legal sales or downloads were declining was live performances. Live performances became another major source of revenue for many bands—and it still is. Some bands do not receive many music streams but do well from live performances because they have loyal fan bases who follow them around. We must take account of musicians’ numerous sources of earnings. One of them is live; others are merchandise sales, synchronisation rights and, of course, sales of physical products and streaming. That is brought out strongly in the Intellectual Property Office’s survey of earnings in the creative industries.

[Joy Morrissey (Beaconsfield) (Con)]

On that point, who wrote a song is important to where the remuneration goes—it is not just about who is performing it live or not. The Bill provides a benefit in that, but for bands who we traditionally think of as performers, we must look at who wrote the music. Original writers and songwriters, as well as those who create original soundtracks for motion pictures, keep all the content and it is much easier for them to transfer their earnings and gains from their musical production. However, there is a difference between collectively packaged items and those that are not.

[Mr Whittingdale]

I completely agree with my hon. Friend. Composers, some of whom may not have their works performed live, are the foundation stone of the industry. I had dinner about three weeks ago with somebody who has probably never been heard of in this Chamber, Terry Devine-King, who is a composer, but writes for television and film productions and advertisements. He receives a good income from doing so. I absolutely recognise the importance of composers.

[Mr Whittingdale]

I suspect quite a lot of artists whom I enjoy and admire may have signed the letter to the Prime Minister, but that does not mean I necessarily think they are right. Some artists are extremely knowledgeable about the economics of the industry, but it is horribly complicated, as I think everybody who has looked at it or sought to participate in this debate will recognise.

Before I move on to the measures in the hon. Gentleman’s Bill, as a former Minister at the Department for Digital, Culture, Media and Sport, I must put on record that I am proud of the Government’s efforts to sustain the industry, particularly when live performance became completely impossible as a result of lockdown. The fact that the Government were able to find £2 billion for the cultural recovery fund and bring in schemes such as the live events reinsurance scheme has kept the industry going.

One thing we can celebrate is that live is now back, and for those of us who enjoy music it is now possible to go and listen again. Last Saturday I was at the Witham Public Hall listening to Bootleg Blondie, which I thoroughly recommend to anybody who is of my generation and remembers with great affection Debbie Harry—who is still performing today, I think, and is about to go on tour. I also went to the Chelmsford Hot Box, in the constituency of my hon. Friend the Member for Chelmsford (Vicky Ford), and listened to two live bands: one a Scottish rock band called Helicon, with a sitar player, and the second a Mexican rock band. The owners of that venue said to me that they could not possibly still be in operation had it not been for the cultural recovery fund, so I take this opportunity to point out that the Government did keep that industry going.

Of course, the thing that has been the saviour of the industry and has reversed Lucian Grainge’s dire prediction is streaming. Where I disagree with the hon. Member for Cardiff West is that he said streaming was taking over from radio. It is not; radio is doing pretty well at the moment and there is very little evidence that it is in decline. I have been talking to Global about that in the past 24 hours. Where streaming is taking over, it is taking over from physical product or downloading. The revenue from sales of CDs or downloading is in steady decline and people now rely more and more on streaming.

The hon. Gentleman also talked about the way in which radio distributes money to performers, artists and composers. That is done through PPL. It is worth noting that in America, artists who get played on the radio do not get any money at all, so there is a specific way that money is distributed as a result of radio plays in this country that is different from streaming, but if we look in some other countries there is no money at all.

As I said, the revenue to musicians comes from a large number of different sources, and streaming is only one. However, it is noteworthy that in the past few years, the share of money from streaming that goes to artists has gone up. Streaming has increased steadily, but between 2016 and 2019—figures that come from the International Property Office’s survey of creative industries’ earnings—artists’ remuneration has gone up by 46%, whereas revenue to the labels has only gone up by 31%. Artists are taking a bigger share of the revenue from streaming services than they were previously, and that is borne out by the IPO survey.

I question what the hon. Gentleman said about the failure of the industry to engage with the IPO; it is not the case. If he looks at the final report he will see that it recognises that, after an initial disagreement about the scope of the survey and one or two other points, the industry provided a lot of data. There is an improvement, but it could go further and I sympathise with one or two points that the hon. Member for Cardiff West made. However, it is not as if artists are suddenly being deprived of revenue as a result of the move to streaming. I shall comment specifically on some of the hon. Gentleman’s proposals and particularly on equitable remuneration.

Equitable remuneration is in the eye of the beholder. Who decides what is equitable remuneration? One answer proposed by the hon. Gentleman is the copyright tribunal. Spain has a system of equitable remuneration, which takes away money not from the rights holders but from the platforms, to give to the artists. There is an argument, which I shall come on to, that the platforms get and keep an unjustifiably high proportion of revenue. However, in the Spanish system, about 23% of the revenue goes on administrative costs.

The principal problem is the idea that labels make huge profits at the expense of artists. That ignores what labels do. I remember from the early days of the industry—before the time that the hon. Gentleman talked about—another campaign mounted by the Culture, Media and Sport Committee, whose then Chair, Gerald Kaufman, was the right hon. Member for Manchester, Gorton. The Committee pointed out that CDs cost tuppence-ha’penny to produce, and therefore it cost virtually nothing to make millions of them, and yet they were sold for a vast amount—£10 or more. What that ignored—and the same applies to streaming today—was the vast number of artists that labels supported on the basis that they could be tomorrow’s Ed Sheeran or Adele. In the vast majority of cases, sadly, they are not, but the only way we can find the stars of tomorrow is to invest in a huge number of artists, in the knowledge that we will find a jewel among them.

When labels invest in artists they expect to lose money in most cases. That is just the way in which the economics of the industry work. About 40% of that revenue goes into marketing and A&R, which identifies artists and finds them. On marketing, people say, “Who needs labels any more because you can put music up on Spotify or YouTube, and you can promote it yourself on social media?” I do not think you would find a single successful artist who would agree with that.

At the moment, there are 60 million tracks on Spotify, and 60,000 tracks are uploaded every day. Among those there may well be real talent and stars, but finding them in that noise is almost impossible. Where a label comes in is with its A&R people, who go out and listen to bands and performers, and find unrecognised talent, which they sign and put together with session musicians, orchestras and song writers, and then market it. That requires not just negotiation with radio stations but expertise in promoting records. One of the biggest places to promote music is TikTok, and a huge amount of effort goes into trying to elevate artists on social media. All of that is where the expertise of labels comes in. They have an important function.

During our debate, attention has been given to the three major global labels—Universal, Sony and Warner. However, 26% of the market for releases is now held by the small independent sector. I have to say to the hon. Member for Cardiff West that I have spoken to a number of independent labels and they are all really concerned about the provisions in his Bill. Just to give three examples from many, Dirty Harp, Good Soldier and Cherry Red have all come forward and said that it will prevent them from finding new British artists and investing in them.

The irony is that the way in which the music industry has developed recently means that some of the most popular artists who are now being found and signed and whose music is beginning to be promoted are the young grime artists from the council estates—from very disadvantaged backgrounds. My fear is that if we take the money away from the labels to give to established, successful artists, we are depriving the future stars of the investment on which they depend. That is one of the real concerns about the effect of what the hon. Gentleman proposes.

The next thing I want to look at is contract adjustment. Yes, sometimes contracts do need to be revisited, and that is something that labels do a great deal of the time. However, the interjection of the copyright tribunal will create huge uncertainty, which will be exacerbated by the proposal for contract revocation after 20 years. Twenty years may sound like a long time, but it is not very long. If a label that is signing an artist and making an initial investment of tens of millions of pounds has the knowledge that they and the artist have reached a contractual agreement that will extend and that will allow that money to be recouped over a lengthy period, that does give certainty. If, after 20 years, the artist can just say, “Well, actually, we’ve decided that we are doing really well, so we want to tear up our contract because we don’t think it’s fair any longer,” that introduces a degree of uncertainty.

I would also say to my hon. Friends that it is profoundly un-Conservative for the Government to step in and say of a contract reached between two willing parties, “Sorry, we are going to completely legally give you the right to tear it up, even though you have committed yourselves to it.”

[Joy Morrissey]

On the issue of copyright and content, I agree with both points that have been made. However, in the nuanced sense, the issue is that the copyright can be adjusted or transferred over to the artist, where they have a pre-existing record label, so that online content, such as that streamed on YouTube, TikTok and Insta, can be made available. An artist now, in the modern day, has the ability to create a direct link between content being shared and direct remuneration, and that is separate from the labels. However, oftentimes, if artists are already linked into a contract, they cannot use that third mechanism, so it would be—

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[Joy Morrissey]

I was boring for Britain, and I apologise, but I shall finish now. Thank you.

[Mr Whittingdale]

In defence of my hon. Friend, this is, as she was illustrating, an incredibly complicated area in which there are many different types of contractual agreement between the label and the artist. Again, the hon. Gentleman’s Bill does not necessarily reflect the number of different permutations that now exist. For instance, some artists want to take a lot of money up front and almost sign away their rights to future income streams from royalty payments. In some cases, that is because they are elderly; I do not want to pick out any particularly artists, but ones who are perhaps of a certain age or above might not think that enjoying the revenue from future streaming will last them very long, so they would rather take a substantial advance payment and give over the future royalty payments.