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Independent Music Companies Association (IMPALA) has released a statement detailing its position on TikTok and the proposed changes to the payment models for music streaming, and how this will affect its members. Founded in 2000, the advocacy group has 6000 members, stemming from Europe’s small music businesses.
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With regards to TikTok, the organization says it is aligned with Universal Music Group and its decision to let its license with TikTok lapse due to low compensation and AI concerns. “IMPALA supports UMG’s stance on TikTok in relation to valuing music properly,” say the organization’s chair of streaming group and CEO of Everlasting Records and Popstock Distribuciones, Mark Kitcatt. “The independent community has adopted a similar approach at various points over the years with other services, from MTV to Apple to YouTube. We also reject arguments equating the use of music on TikTok to promotion.”
IMPALA’s stance on TikTok’s lack of policing for AI generated content is also similar to what UMG addressed in its letter to artists and writers when it announced its plan to leave the platform. “services need permission for the use of music, including soundalikes and AI adaptations. The new AI framework in Europe also helps set human-centred guide rails in this regard,” says Helen Smith, executive director of IMPALA.
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IMPALA also notes that it has concerns with how some streaming services — including Spotify, Deezer and Apple — are changing their payments models to artists and labels. “Adjustments can be made [by Deezer, Spotify and Apple] to avoid harm,” says the organization. IMPALA calls for a better seat at the table for smaller music companies. “Any changes in how revenue is allocated [should] be properly assessed by services in terms of the impact they create over the whole market… We also call on streaming services to consult and discuss this with their independent licensing partners before the decision is made.”
Detractors of Deezer and Spotify’s new royalty payment models say that adding a threshold for a minimum number of streams that an artist has to reach before qualifying for payment is unfair to smaller artists and companies that represent them. Also, streaming companies are considering or are already adding in penalties for music companies that facilitate music involved in streaming manipulation and fraud. For distributors that services a large scale of DIY talent in particular, this could have an outsized impact on their businesses,
To get ahead of these problems, some distributors have joined together to form the Music Fights Fraud coalition, including TuneCore, Distrokid, and CD Baby, to come up with best practices for fighting bad actors that sign up for their platforms and to establish a common database to share information on the fraudsters each service catches. IMPALA says it supports Music Fights Fraud and that addressing maniplation is a “priority” for the organization and its members.
Chair of IMPALA and head of Balkans association RUNDA, Dario Drastata, adds: “IMPALA supports collaborative reform that is sustainable and drives diversity. We seek urgent solutions to address manipulation and revenue dilution. We also need to make sure the proposals are fair to all, and we hope Merlin’s recent agreement with Deezer will contribute to this objective. It’s the only way to create a sustainable ecosystem. We believe for example that there are simple solutions for problems with thresholds that can be plugged in and will continue our constructive discussions with services to explore options. Finding the answers will ensure services are able to further develop opportunities in key markets and genres as well as across multiple languages.”
Helen Smith says, “IMPALA’s work is vital for Europe’s music economy. Independents account for over 80% of the sectors’ new releases and jobs, providing stable and exciting opportunities for artists, fans and music employees across Europe. This was also reconfirmed at IMPALA’s AGM last year, including the elimination of value gaps, and developing the digital market in all territories with great talent, huge audiences and untapped digital potential, such as in Central and Eastern Europe. “
A coalition of artist and label groups is calling on legislators to urgently address a 2020 court ruling that risks seeing European musicians lose out on millions of euros in royalties each year to U.S. acts.
For decades, American musicians have been denied royalties for the use of their music on broadcast radio or when it’s played in cafes, shops and bars in many overseas countries due to the lack of equivalent terrestrial radio performance and public performance rights in the United States. This practice is based on a principle known as material reciprocity, which means that broadcast and performance revenues are only paid out to countries that apply the same rights.
The longstanding practice of reciprocal treatment was, however, suspended in the European Union (EU) by a 2020 ruling from the European Court of Justice (ECJ). In that decision, the ECJ decreed that all recording artists are entitled to an equal share of the royalties generated when their music is played on radio or in public premises in the EU, regardless of their nationality — or the absence of radio and performance rights in an artist’s home country.
Brussels-based independent labels trade body IMPALA says the ECJ ruling will result in European artists and labels losing out on around 125 million euros ($137 million) in royalty income each year, with the equivalent sum instead going to U.S. musicians. Previously, these broadcast and performance royalties were mostly divided up between local labels according to their market share.
European countries that currently withhold public performance and broadcast royalty payments to U.S. artists and labels include the United Kingdom, France, Belgium, Denmark and Ireland. (Outside of Europe, three countries —Japan, Argentina and Australia — also deny royalties to U.S. musicians because of a lack of reciprocal rights).
In 2019, prior to the court ruling, SoundExchange, which issues licenses to online and satellite radio services, estimated that recording artists and rights holders in the United States lost out on an estimated $350 million in royalty payments due to what it called the “unfair treatment of music creators.”
So far, the Netherlands is the only EU country to change its legislation in line with the ECJ ruling, which has become widely known as the “RAAP” case in reference to Irish collection society Recorded Artists Actors Performers (RAAP), which initiated the reforms by taking legal action against Phonographic Performance Ireland (PPI) in 2020. In that case, RAAP challenged PPI in the Irish High Court after it reduced royalty payments to performers from a 50-50 split with labels to around 20%. The case was then referred up to the ECJ, which made the now-controversial ruling in September of that year.
U.S. repertoire represents around 40% of all public performance and broadcast income collected annually in the Netherlands, according to Dutch collecting society SENA. Until recently, this income was neither collected nor distributed. Since the change in practice, SENA has increased its tariffs on public performance royalties from 12.5% to 26%.
Will Maas, chair of the Netherlands’ musicians’ union, said in a statement that the rise in rates is not enough to make up for the additional U.S. repertoire now being collected, resulting in a “clear and substantial drop” in revenue going to Dutch and European performers. “This is what awaits other countries if nothing is done to address this,” he added.
In response, IMPALA executive chair Helen Smith wants the European courts to reverse its 2020 ruling and restore the principle of material reciprocity.
“It is the EU’s responsibility to prevent European artists and producers losing millions every year to the USA, which has chosen not to protect these rights,” said Smith in a statement. She added that the lack of terrestrial radio performance rights and public performance rights in the United States costs the world music economy “hundreds of millions, if not billions a year.”
IMPALA also supports a flexible solution that would enable EU countries to pay U.S. artists if they already did so before the ECJ judgment.
Other music groups and CMOs backing IMPALA’s call for action include Adami in France, the Swedish Musicians’ Union, Belgium’s PlayRight and the German Federation of Musicians. They argue that reciprocal treatment forces countries to raise their own levels of protection for musicians by not allowing nations to benefit from other countries’ rules unless they follow the same standards.
Not everyone in the music business is against the ECJ ruling and the push for so-called national treatment — whereby foreign recording artists and labels receive the same types of royalties as the nationals of a given country — to be standardized across the global music business. Executives who back national treatment say that any fall in label income would likely be offset by the increased set of rights and royalty collections elsewhere in Europe resulting from the ECJ decision.
That, however, is not a view shared by IMPALA or its members.
“Hundreds of thousands of artists count on the EU to do the right thing,” said Dutch musician Matthijs van Duijvenbode in a statement, “and to do it fast.”
Spotify’s new royalties model will be a subject of discussion when IMPALA’s board meets later this month.
In a brief statement, the Brussels-based independent music companies association announced it was canvassing its member views on the proposed changes, detailed for the first time in a blog post published on Tuesday (Nov. 21).
“Our focus is and will remain ensuring a fair, diverse and sustainable music ecosystem for all,” reads the trade body’s message, “as set out in our 10-point plan to make the most of streaming, which was released two years and a half ago and was updated earlier this year.”
The board of IMPALA is scheduled to meet next Thursday, Nov. 30.
With its post, Spotify confirmed the broader music industry’s worst-kept secret by sharing details of a three-pronged royalties model, which would funnel more money to popular artists, labels and distributors, lift the streaming threshold, while putting the clamps on streaming fraud.
Among the changes touted by Spotify: tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties; labels and distributors will fined per track when “flagrant artificial streaming is detected” on their content; and functional content — think rain noises, whale sounds, recordings of wind rustling the leaves— will be significantly devalued, and its minimum track length increased to two minute into order to be eligible to generate royalties.
By tackling these issues that account for just a “small percentage of total streams,” Spotify reckons, its new policing of content “now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years.”
IMPALA’s voice has been front and center in the debate for a “fairer, more dynamic” streaming market.
In April, IMPALA published an updated version of its 10-step plan to “make the most of streaming,” which proposed various changes to how digital royalties are allocated, including attaching a premium value to tracks that the listener has sought out, a so-called “Fan Participation Model” whereby artists and rights holders could generate incremental revenue within digital services through offering special features and extra tracks, higher share for master rights and more.
Later, in September, IMPALA raised concerns over the new “artist-centric” streaming model being rolled out by Deezer and Universal Music Group (UMG), warning of a potential “two-tier” music market that unfairly disadvantages indie artists and labels.
The European trade body represents nearly 6,000 independent companies, labels and national associations, including Beggars Group, Cooking Vinyl, Epitaph and PIAS Music Group.
It’s been months since the concept of “artist-centric” royalties was introduced in a January memo from Universal Music Group Sir Lucian Grainge to his staff. It raised a considerable amount of speculation for a company memo, even though for a while the concept remained rather vague. Something about streaming manipulation, functional music, and a model that “supports all artists.”
Now, though, that speculation is over: Deezer has announced its UMG-backed proposal, with plans to launch it soon.
We need more clarity, but this proposal definitely adds to the streaming debate, which is important if we want to improve the streaming ecosystem. The European recorded music market is still far from where it should be – around 42% of its market peak when adjusted for inflation, following the absence of any substantial change in streaming subscription prices over the past decade and a half.
How do we fix this?
First, we need to see higher subscription prices. We have seen some increases, but they are still minor. We just can’t escape that fact. Then there are ideas about how the business can reallocate royalties, and we need as many voices as possible to take part in the discussion. IMPALA started t this wo years and a half ago with its 10-point plan to make the most of streaming, which we revisited in April (infographic here and full plan here). We think Deezer’s proposal is ambitious, and some of it resonates with our own. But it also includes some more controversial provisions.
Let’s start with them.
I’m referring of course to Deezer’s plan to set a threshold for boosts in royalties, available only to acts that get a certain number of streams from a certain number of listeners. Where would the additional revenues go? How many artists would benefit? And what does it say about the stability of the system that an artist could attain “professional” status for a month, only to potentially lose it in following one?
More clarity is needed. Independent labels account for 80% of new releases (including artists patiently awaiting discovery, artists who cater to niche audiences, artists from smaller territories and newcomers just starting their artistic journey). We must avoid a two-tier approach that would impact not only their work, but musical diversity as a whole. We understand that this is not Deezer’s objective, but IMPALA will always oppose thresholds that would harm smaller players and smaller markets, a position that was set already in our first streaming plan. Let’s make sure it’s not the case here.
Key to IMPALA’s approach is a progressive redistribution of revenues where tracks would see a boost in royalties beneath and before the point of global ubiquity, and those which are in the top echelon (however that’s defined) would lose a small percentage of revenue. That’s the Artist Growth model – initially developed by AIM in the UK. We feel this can lead to a healthier ecosystem and more opportunity for new creators from diverse genres.
This could be controversial as well, which is fine, as long as we remember that change must be discussed – and negotiated. It shouldn’t simply be imposed in a deal between two market players, even when one of them is the leader of the market. And while Deezer and UMG will launch this plan soon, until other stakeholders agree, this “artist-centric” model will really be UMG-centric.
Deezer’s plan also has a lot of positives, though.
Who could argue that streaming manipulation needs to be addressed, for example? We absolutely support Deezer’s commitment there, which is also point 4 of IMPALA’s proposal, but we will need to review the idea of caps on individual accounts as we wouldn’t want superfan streams to be devalued.
Deezer also want to address “noise” content is also an issue that Deezer seeks to address. We flagged this in our plan, as a way to address revenue dilution. So we welcome this move and would appreciate other ideas to handle this content, which has a place, as long as it doesn’t dilute royalties.
Deezer’s second proposal for boosts in royalties, for tracks that fans actively engage with, is also interesting. That’s also the rationale behind our “Active Engagement” model, put forward in our plan in 2021. There are different ways one could do this, but it’s great to see the idea getting traction.
Is Deezer ready to make the imaginative leap to embrace the “Fan Participation” model, also proposed by IMPALA, to offer creators a space within the service where they could develop incremental revenues from direct relationships with fans? If so, we could be talking about really exciting and important changes in the streaming market.
We hope that services will also look at ways of rewarding artists who record longer-form music. That’s a conversation we started with our “Pro rata Temporis” model. The issue needs to be addressed without at the same time harming shorter tracks.
In the meantime, we need more extensive discussion and debate. We invite all interested parties to explore IMPALA’s plan and share their perspectives as we collectively navigate the evolving streaming landscape.
Let’s keep the ideas coming!
Helen Smith is the Executive Chair of IMPALA, the European non-profit organization that represents independent music companies, with key issues that include copyright, sustainability, diversity and inclusion, streaming reform, AI, finance and digital services as well as strategic relations with key partners through the Friends of IMPALA program.
European independent labels trade group IMPALA says it has concerns that the new “artist-centric” streaming model being rolled out by Deezer and Universal Music Group (UMG) later this year could create a “two-tier” music market that unfairly disadvantages indie artists and labels.
In an announcement on Friday (Sept. 15), Brussels-based IMPALA says that Deezer’s plans to introduce a new methodology for paying out streaming royalties for UMG artists from October 1 — at first only in France, Deezer’s biggest market — risks impacting independent and micro labels, which provide 80% of all new releases in Europe.
Among those whom IMPALA warns could be affected by the new streaming model announced by Deezer and UMG last week are new artists yet to be discovered, acts that deliberately cater to niche audiences and musicians from smaller markets.
The European trade body, which represents nearly 6,000 independent companies and labels, including Beggars Group, Cooking Vinyl, Epitaph and PIAS Music Group, says “the fact that the Deezer proposal has been developed in a vacuum” with UMG, the world’s biggest music company, “instead of the sector generally is also a concern.”
In response to its members’ worries, IMPALA says it is seeking “more clarity” from Deezer about its new streaming royalties model, which replaces the existing pro-rata setup — whereby one stream equals one play, with the total number of plays proportionally divided up by artists and labels — with a new system that prioritizes active listening, meaning users who intentionally search for or click on an artist’s song.
Under the new “artist-centric” model, “professional artists,” which Deezer and UMG categorize as artists who have accumulated at least 1,000 monthly streams from at least 500 unique users, will receive a higher share of streaming royalties, while Deezer will remove “non-artist noise” — essentially, white noise and nature sounds, which the company says accounts for 2% of streams — from the available royalty pool. As part of its reforms, Deezer has also vowed to crack down on streaming fraud and malicious actors exploiting the system.
At present, Universal is the only label signed up to the new streaming royalty allocation model, although in an interview with Billboard, Deezer CEO Jeronimo Folgueira said the Paris-based company is in discussions “with all content providers” and anticipates that more than 50% of its repertoire will be on the new model come its launch in October. He said the company also plans to expand the offer beyond France, where it will be piloted this fall, to “all providers in all countries” in 2024.
Responding to the UMG-Deezer plan, IMPALA’s executive chair Helen Smith said she welcomes Deezer’s “commitment to improve the streaming market” but cautions that “more debate is needed on this vital question… and its potential impact on the music ecosystem.”
In April, IMPALA published an updated version of its own 10-point plan to reform streaming, which proposed various changes to how digital royalties are allocated, including attaching a premium value to tracks that the listener has sought out as well as a so-called “Fan Participation Model,” whereby artists and rights holders could generate incremental revenue within digital services through offering special features and extra tracks.
The trade group says it has discussed its proposals with multiple digital services and will continue to push for “meaningful streaming reform.”
“It’s a common thread through the history of recorded music that the great artistic advances and changes have come from, and through, the independent sector. I don’t expect Goldman Sachs to know that but Deezer and UMG certainly do,” said Mark Kitcatt, chair of IMPALA’s streaming reform group.
Kitcatt added, “We hope that services will join with us to reform the streaming world in a way that increases opportunity and reward for all dedicated music creators, and enhances and enriches the experience for fans, rather than just diverting more royalties towards the biggest artists.”
International independent pioneers Michel Lambot and Kenny Gates received IMPALA’s Outstanding Contribution award to commemorate the 40th anniversary of the [PIAS] group. The award was announced on Tuesday (July 4).
Over the last four decades, [PIAS] has grown from a vinyl record importer on behalf of UK independent record labels into a key European and global recording, marketing and distribution outlet. [PIAS] currently has 19 offices and 280 employees active globally.
Lambot and Gatesalso founded IMPALA in 2000 to develop a single voice for the independent music sector in Europe. They were instrumental in creating Merlin as well as Worldwide Independent Network (WIN), with a view to supporting and expanding the independent music ecosystem internationally.
Lambot and Gates were presented with their awards by Helen Smith, executive chair of IMPALA, at their BXL CENTRAL – CHEZ [PIAS] record shop and office located on Rue Saint Laurent in Brussels.
“Michel and Kenny’s story is an inspiration to all emerging independents starting out in the sector,” Smith said in a statement. “The contribution of [PIAS] to the European music sector is totally unique. [Their] amazing 40th-anniversary re-releases speak for the artists and great music, and IMPALA, Merlin and WIN speak for their approach on collaboration making everyone stronger.”
“Back some 25 years ago, we had the idea to combine forces of a handful of independent companies to increase our market leverage and playing field,” Lambot said in a statement. “That sounded crazy and naive: trying to unify independent companies owned and run by people fiercely independent was antinomic… And now getting an award by IMPALA which has become a kind of institution makes me feel so proud and so happy. The recognition by our peers of what we did all these years and are still doing, Kenny and myself, as [PIAS] on one hand, and for the independent world on the other hand, is very moving”.
Gates, who serves as CEO of [PIAS] added: “Our goal at [PIAS] has always been to expand our dreams by creating a company of holistic values that reflects a pan-European diversity. It’s been an incredible journey of constant adaptation, and we couldn’t receive this award without thanking all our staff and friends.”
IMPALA’s Outstanding Contribution Award is designed to put a spotlight on European independent music and those who drive it, as well as initiatives that deserve particular recognition. Previous recipients include Tony Duckworth, Didier Gosset, FONO, Kees Van Weijen, Keith Harris OBE, Tom Deakin, Love Record Stores, Music Declares Emergency, Markus Tobiassen and newspaper Dagens Næringsliv, Jonas Sjöström, Plus 1 Refugees welcome!, Alison Wenham, Label Love, Eurosonic Noorderslag, Sabine Verheyen MEP, Armada Music/Armin van Buuren, Martin Mills OBE, Mary Moneyball MEP, Charles Caldas and Mario Pacheco.
Lambot and Gates previously received the Indie Champion award at the AIM Music Awards 2022 in London.
Late British media journalist Juliana Koranteng previously invited Lambot and Gates to share their story on her 20MinutesWith podcast. In this episode, the two executives talked about their ambitions, successes and challenges in growing the [PIAS] network over the years. (Sadly, it turned out to the last episode Koranteng recorded. The journalist died in February at age 64.)
IMPALA was established in 2000 and now represents nearly 6,000 independent music companies. The organization’s mission is to grow the independent music sector sustainably, return more value to artists, promote diversity and entrepreneurship, improve political access, inspire change and increase access to finance.
The U.K. organization Women in CTRL is the second recipient of IMPALA’s Changemaker award, it was announced on Tuesday (May 30). The not-for-profit organization, founded by Nadia Khan, seeks to advance gender equality in the music industry.
Women in CTRL encourages women and non-binary persons to find their strengths, develop their own personal brands and build the tools and confidence to become leaders. The organization runs creative growth programs, community workshops, mentoring, training, organizing events and more.
Women in CTRL also publishes research and reports, such as the “Seat at the Table” report looking at the representation of women, with an intersectional focus on Black women, in the boardroom of U.K. music trade bodies. They also released the “Women in Radio” report looking into the experiences of women in the radio industry to identify the barriers women face.
Women in CTRL has also partnered with AIM and Amazon Music to launch a new apprenticeship program, “Amplify,” which aims to improve access to music industry careers for women and non-binary people.
“It’s an honor for Women in CTRL to be chosen as the second recipient of the Changemaker award,” Khan said in a statement. “This recognition affirms our work, inspires us to continue and highlights the independent community’s collective determination and passion in driving positive change within the music industry. Women in CTRL firmly believe in the transformative power of sharing best practices and learning from the exceptional organizations that IMPALA champions.”
“Women in CTRL is an inspiration to all in the sector who seek to bring change,” Helen Smith, IMPALA’s executive chair, said in a statement. “It’s an honor to be able to showcase their work through our Changemaker Award.”
The Changemaker Award puts the spotlight on projects that champion DEI work (dubbed “equity, diversity and inclusion” in Britain). The recipient is selected yearly by IMPALA’s DEI task force. Launched in May 2022, the award highlights projects that have an impact on the independent music sector. It is presented yearly during European Diversity Month.
The POWER UP initiative was the inaugural recipient last year. Launched in January 2021, POWER UP provides mentoring, support and grants for 40 Black music creators and industry professionals.
IMPALA was established in 2000 and now represents nearly 6,000 independent music companies. IMPALA’s mission is to grow the independent music sector sustainably, return more value to artists, promote diversity and entrepreneurship, improve political access, inspire change and increase access to finance.
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