Business

LONDON — European regulators are calling for sweeping new laws to help fix the “imbalance in revenue allocation” from music streaming and deliver higher rates of pay for artists and songwriters. 
On Wednesday (Jan. 17), Members of the European Parliament (MEPs) voted overwhelmingly in favor of new legislation being drawn up to ensure creators are fairly compensated from music streaming with 532 votes for, 61 against and 33 abstentions. 

The resolution is non-binding, meaning there’s no legal requirement for its recommendations to come into force, but the report’s endorsement by MEPs puts pressure on policy makers to address long-held complaints from musicians about low returns from streaming. The adopted text now passes to the European Commission for consideration. 

“The Parliament is giving voice to the concerns of European creators, who are at the heart of the music streaming market,” MEP and rapporteur Ibán García Del Blanco said following Wednesday’s vote. Ensuring that authors are “credited and fairly paid has always been our priority,” he said. 

The EU proposals state that current “pre-digital royalty rates” must be brought in line with “modern rates” and call on the industry to explore “fairer models of streaming revenue allocation” for artists and creators, including pro-rata and user-centric models “or totally new ones.”

The current global streaming model pioneered and dominated by Spotify, Apple, YouTube and Amazon Music leaves a majority of authors and performers with very low rates of pay and often means they are unable to sustain careers in music, say MEPs.

Over the past year, the standard pro-rata streaming model has been a major topic of consideration throughout the industry, leading to several of the leading streaming platforms to trial alternative models. 

In September, Deezer announced that it was piloting a new “artist-centric” system in France in partnership with Universal Music Group that rewards artists and songs that actively driving listener engagement. 

A few months later, Spotify announced that it too was looking to introduce changes to its streaming royalty model, including a new listening threshold that tracks must reach in order to qualify for royalties and a targeted clamp down on streaming fraud.

The EU report — titled “Cultural diversity and the conditions for authors in the European music streaming market” — does not reference those industry-led reforms. Instead, it calls on all stakeholders in the music business to take “all necessary steps” to overcome the current imbalances in the allocation of streaming royalties.  

The report also strongly condemns the use of so-called payola schemes that force artists to accept lower royalty rates — or forgo them entirely — in exchange for greater visibility on streaming platforms.  

One of its other key recommendations is that the EU takes action to protect the long-term prominence of European musical works on global streaming platforms by taking “concrete measures,” including the possibility of introducing quotas for European songs or artists. 

Details on what form these quotas would take or how they would be implemented are not specified in the text, although quotas already exist in many European countries for domestic content broadcast on national radio and television stations. 

“EU legislation should include diversity indicators to assess the array of genres and languages available and the presence of independent authors,” say MEPs, noting that the majority of streaming revenues go to major labels and big global stars, while less popular styles and less common languages are streamed less frequently. 

On the subject of transparency and artificial intelligence (AI), the report says platforms should be obliged to make their algorithms and recommendation tools transparent to prevent unfair practice, such as the manipulation of streaming numbers.

In line with the terms outlined in the EU’s Artificial Intelligence Act — which was provisionally passed in December and forms the world’s first comprehensive set of laws regulating the use of AI — MEPs said music works generated by AI must be clearly labelled as such and unauthorized use of an artist’s voice or likeness banned. 

Responding to the EU report, Helen Smith, executive chair of European independent labels trade body IMPALA, representing almost 6,000 music companies, said its adoption by MEPs “comes at a decisive time for the music sector.”

“The idea that artists should receive a fair contemporary digital rate reflects the independent sector commitment made almost ten years ago,” she said in a statement.  

John Phelan, director general of international music publishing trade association ICMP, thanked rapporteur Ibán García Del Blanco for his “diligence and determination” in defending artists’ rights, while Jess Partridge, executive director of European Music Managers Alliance (EMMA) said the report “underlines the barriers faced by artists and their teams.” 

“The music streaming market needs to properly reward those who are at the core of its success,” echoed Véronique Desbrosses, general manager of European Authors Society GESAC. “We count on the European Commission to take the next step and table the needed legislative proposals.”