The UK government has published a new transparency code that sees streaming services and music companies commit to provide more information to artists and songwriters about how their music is being monetised on digital platforms.
The code, says the Intellectual Property Office, "sets out agreed standards of good practice, forming part of a shared ambition across the music industry to build greater trust in music-maker contracts, streaming licensing deals, royalty payments, usage data, audit rights and communication to music creators. [It] has been developed and agreed by twelve music industry bodies representing music creators, record labels, publishers, digital service providers, distributors and collecting societies".
The Council Of Music Makers, which was involved in negotiating the code, has now called on everyone in the music industry to fully embrace it and "to go above and beyond in providing music-makers with the information they need to properly manage, understand and audit the digital side of their individual music-maker businesses".
The lack of transparency in the digital music business was raised as a key concern during the UK Parliament's inquiry into the economics of music streaming.
In their report, MPs on the Culture, Media & Sport Select Committee stated, "artists and their representatives face a systemic lack of transparency from both music companies and the streaming services that license their works. This exacerbates the inequities of creator remuneration by creating information asymmetries and preventing them from undertaking their right to audit".
The fact that artists, songwriters and their managers lack key information about how digital royalties are calculated and paid had been raised many times before. Streaming is a much more complex business than selling CDs, and the streaming licensing model was developed by a small group of streaming services, record companies, music publishers and collecting societies. The deals agreed in the late 2000s were shrouded in secrecy and little information was shared with the music-making community.
Some streaming services and music companies have made some effort over the years to communicate more information to artists and songwriters. However, such transparency is not the norm, and - many artists and managers would argue - even the best players in the market aren't doing enough. The total lack of consultation - and minimal communications - around the recent changes made by Spotify, Deezer and Apple to their payment models have angered many in the artist and management communities.
The code seeks to address some of these transparency issues and the IPO will continue to convene twice yearly meetings to consider how things are working. For the CMM, there is much more to be done, but the code is a step in the right direction. "Although the commitments in the code are modest", its statement adds, "it provides a framework that can be used to start tackling the ‘systemic lack of transparency’ in music streaming that was identified by the CMS Select Committee in 2021".
Commenting on the code for the government, Culture Secretary Lucy Frazer says, “As technology continues to transform the industry, musicians must be entitled to a clear and simple way of understanding what they can expect to be paid from streaming royalties. I welcome the music industry working together on this and look forward to this code being put into practice".
Jo Twist - CEO of record industry trade group the BPI, which was also involved in negotiating the code - adds, “This landmark agreement, the first of its kind between the creator and rightsholder communities, articulates what good practice looks like in terms of transparency and communication throughout the digital music supply chain. We are proud to have played our part in this collaborative effort, working with government and industry partners to bring this code to fruition".
AIM was also part of the process, representing the views of independent labels. Its COO Gee Davy says: “We welcome the participating streaming platforms’ commitment to aid wider understanding of their models and payments. As well as providing clarity on expected standards for more established players, we expect the code to prove vital for those starting out and growing their business to ensure they are set on the right path from day one. By consulting across the broad independent sector, AIM has ensured that the code should be achievable for all, no matter their scale”.
You can access the Transparency Code here. Over the next week, CMU will be publishing a more detailed guide to the code itself and viewpoints from some of the organisations involved in negotiating it.