I beg to move, That the Bill be now read a Second time.
I refer the House to my entry in the Register of Members’ Financial Interests, including some small earnings as a musician, and my membership of the Musicians’ Union and its financial support at election time. I also declare my membership of the Ivors Academy, which represents the interests of songwriters and composers.
Having taken an interest in the music industry over the 20 years that I have been in the House, including completing a fellowship with the Industry and Parliament Trust on the music industry, at one time or another I have probably crossed paths, and attended events, with almost every organisation that is interested in the Bill and its proposals. Some in the industry like to hide the wiring with bright lights and promises, but as policy makers we should want to get this right for our wonderful British creators, the bedrock of the music industry. Let me make clear from the outset that my interest is not to pursue a party political battle, but to work across the House, and across the sector, with anyone who is interested in achieving better remuneration for musicians, songwriters and composers in this new and exciting era of music streaming.
When I was first elected to the House, the music industry was encountering an existential crisis. The new digital technology of file sharing meant that, for the first time in history, it was possible to copy and share recorded music instantly, at zero cost, with no physical medium required. That led some to question whether it would ever again be possible for creators to earn money from their recorded music, and over the years it brought a steep decline in revenue to the music industry.
My right hon. Friend Sir Greg Knight, who is in his place on the other side of the Chamber, my hon. Friend Pete Wishart and I are occasionally together in a musical enterprise called MP4. All of us as a group, including our former colleague Ian Cawsey, argued strongly at the time—this was one of the reasons we put the group together, apart from to have fun—that it was vital for the UK economy and for creators that we supported the music industry in its efforts to protect, extend and enforce copyright, and to develop new technologies to allow for safe, legal and monetised consumption of music so that rights holders and creators could be paid. Across parties, we supported the preservation of intellectual property when some flirted with the anarchy of piracy.
Eventually, that new technology came along, first with legal downloading and then with streaming on services such as Spotify and Apple Music, which I know many right hon. and hon. Members are familiar with—so much so that that is now the dominant way in which people consume music across the world, and particularly here in the UK. It makes up more than 70% of UK recorded music revenues, generating hundreds of millions of pounds of new revenue for the UK music industry.
I congratulate my hon. Friend on his Bill. Many people watching the debate may think it is purely about the household stars and that we are arguing over people who are already wealthy. Yesterday, however, I met a viola player who has played on 20,000 different records that are online but does not receive a single penny for those contributions. Is not my hon. Friend’s Bill not just for the household stars but for every single musician out there?
My hon. Friend is absolutely correct, and I will go on to explain why. It is interesting that orchestra players often receive nothing when their music is streamed. In fact, sometimes the only person who receives money is the only person who does not make any noise—namely the conductor of the orchestra. That is yet another irony of the system that we are discussing.
Let us be clear: streaming is an incredible technology. It enables us to have almost the entire catalogue of the world’s music in our pockets. To those of us who grew up in an analogue world, carrying around 12-inch vinyl copies of the latest David Bowie album under our arms, it is nothing short of miraculous that we can play music in this way. But artists and songwriters have not had the same boon from this new windfall as the major record companies.
I congratulate my hon. Friend on his Bill. Does he agree that it is a scandal that artists are getting perhaps a quarter of what the big record labels are getting from streaming services? As my hon. Friend Mr Perkins said, we are not talking only about the stars, but about people such as music students looking for a career in music, as well as songwriters and performers. Many in my constituency, where the cost of living is extremely high, are getting no money and they have just had a terrible two years.
My hon. Friend is absolutely correct. I want those young people to have the possibility to earn at least some part of their living from recorded music and not to have to rely entirely on live music. I will go on to develop that point further.
I will just make one further point and then I will give way to the right hon. Member.
I was saying that artists and songwriters had not had the same boon. I think Members across the House will be staggered to know that the chairman and chief executive officer of one of the three major corporations that dominate the market of recorded music is set to receive more income this year—£153 million, according to industry press reports—than every songwriter and composer in the UK combined, including the rich ones, will receive from the streaming of their music in this country. Such facts, and the desperate plight of musicians who, as my hon. Friend Andy Slaughter was just saying, have been unable to perform live due to covid, have triggered close scrutiny of exactly what is going on with the economics of music streaming.
I congratulate the hon. Gentleman on his Bill and I am happy to support it. I hope that it gets Government support at some stage, if not necessarily today, because we should all see this as an important part of the levelling-up agenda. That agenda will never achieve the things that we want it to unless it addresses the imbalance of power between big corporates on the one hand and the individual and the small business on the other. That is at the heart of his Bill, and it is why all those who purport to support levelling up should support it today.
The right hon. Gentleman is right; our duty as politicians is not only to utter rhetoric occasionally, but to turn it into reality. In the case of the music industry, he is absolutely right that this is a levelling-up measure.
I congratulate the hon. Gentleman on the Bill. Does he share the concerns of some that, although the Bill might increase the income of some artists, there is a real danger that other artists in the sector might see their income fall and that that might affect investment?
I thank the hon. Gentleman for his intervention; I know that a series of points have been made about the Bill, and I will come on to that point later.
My Bill largely endeavours to bring into law measures that were proposed in a Digital, Culture, Media and Sport Committee report from earlier this year. I pass on to the House the apologies of the Chair of the Committee, Julian Knight, who cannot come here today because he has a constituency emergency. The report, titled “Economics of music streaming”, was unanimously agreed, cross-party, after many months of hearings with witnesses from all parts of the music industry and after hundreds of written submissions on the subject were received. I think it is fair to say that my fellow Committee members, including my hon. Friend Julie Elliott, who is sitting close by me today, were staggered—perhaps those who had not been particularly attentive to music industry issues—by some evidence that they heard and by the seeming unwillingness of those at the top of the music industry to acknowledge the problems that we uncovered, and to act to put them right and rebalance the music industry to support creatives.
I welcome the fact that one of the three majors, Sony, did at least agree to pay unrecouped artists with pre-2000 contracts some money when their music is streamed. Sadly, the other big two, Warner and Universal, have not followed suit, and in the latter case, a public share offering has been issued that will result in the extraordinary £153 million pay-out to the company’s boss, at a time when many artists have been struggling to pay their rent, as we heard in evidence.
I want to outline for the House the main measures in my Bill. It extends the existing Copyright, Designs and Patents Act 1988 to modernise the law for the new world of music streaming. One of the features of streaming technology, which I am sure hon. Members are familiar with, is that when someone plays a piece of music on a streaming service, it is not quite the same as the action of choosing to play a record, but neither is it quite the same as listening passively to music on the radio. How this is treated in law is crucial, because it affects how much artists and songwriters get paid.
When we stream music, sometimes we choose what we want to listen to or sometimes an algorithm chooses it for us based on the things that it thinks we might enjoy. Frequently, we might start playing something of our choice and the service will continue to play music to us that it chooses, which, in some ways, makes it more like a radio station. To emphasise that point, I note that there is even a feature called “Radio” on the platform Spotify, as hon. Members may know. During the course of our Select Committee inquiry, we learned that music listening is gradually moving from traditional broadcasting towards streaming. It has been reported from a speech by a Spotify executive that its corporate aim is gradually to replace radio as the main way that people listen to music.
Under existing UK copyright law, when music is played on the radio, artists are entitled to an unwaivable payment called equitable remuneration, which is an important part of the way musicians can earn income from recorded music, on top of any session fees and on top of the terms of any recording contract. If radio listening declines in favour of streaming, as Spotify predicts and as is happening, clearly musicians will lose income from equitable remuneration as that trend develops. Record labels argue, however, that streaming music is the equivalent of the sale of a record; the jargon in law is “making available”. They therefore say that musicians should be paid on the basis of recording contracts, many of which were signed in relation to the production and distribution of physical records before the technology of streaming was even invented.
As the hon. Gentleman probably knows, I worked in commercial radio for more than 20 years and spent much of my time negotiating with record labels as part of a working group. I think that UK musicians are being devalued, and I do not think that there are fair earnings, but I think that ad-funded streaming services are not paying fairly for the music that drives them. That is the issue that we really should tackle.
I thank the hon. Gentleman for his well-informed intervention. He is right that there is an issue with ad-funded streaming services and the rates that they pay. The Committee concluded that the fix that I am proposing today was the best way to build on existing UK law to rectify the matter, but there is an issue with how much streaming services pay and with how much they are paid by record companies: about 30%, after the Chancellor has his bit, of the cut from the subscription we pay and the ad revenues. It is a valid point, but the Committee concluded unanimously across the parties that this is the best way forward.
My Bill, as recommended by the Select Committee, would provide performers on a recording with a right to an unwaivable payment or equitable remuneration when their music is streamed, akin to the existing right in radio and broadcast. Importantly, it would not take away the right of labels to value their exclusive rights, which would remain intact. Nor would it dictate what the value of any remuneration should be; that is best settled, as it is now, by agreement between the parties. However, it would make it clear that the payment is an additional payment and could be referred to the existing copyright tribunal where there is a difference of opinion.
I thank the hon. Member for this important debate. In what way would these proposals help in the situation in which Dame Vera Lynn found herself? She was one of the most loved entertainers and icons in the country, yet when there was a revival of some of her most famous and beloved songs, she did not receive royalties under her contract, which had been conceived and signed before the internet had even been considered and built. I would be grateful if we explored that point.
The hon. Lady makes a powerful and pertinent point. She is absolutely right: wonderful British artists such as Dame Vera Lynn who recorded music in an era when—let’s face it—some record contracts were not exactly favourable towards the artist are still held to their terms by record labels. Sometimes they are unrecouped, which means that the record label has decided that it does not owe the artist anything at all because of the original advance that it made on the record. The point is that labels no longer have to manufacture or distribute records, there is no longer a percentage getting broken on the way to the record shop—all those costs are gone. They still have Dame Vera Lynn’s recordings, put them out there and make money from them, but under the terms of their legacy contract, they do not have to pay a penny. I will come on to explain how my Bill would take care of the very issue that the hon. Lady rightly raises.
The second major provision in the Bill—the first dealt with equitable remuneration—would place a transparency obligation on those who have had rights transferred or licensed to them, requiring them to supply timely and comprehensive information to the songwriter, composer or artist about where and how their music is being played, so that they can be sure that they are being paid what they are due. The Select Committee recommended this after hearing evidence that it is often very difficult for artists and songwriters to gain any clarity or to audit their works. We heard of money that should have been paid disappearing into what are known in the industry as “black boxes”. It is clear that songwriters suffer particularly because of poor data standards.
On the subject of the value of streaming to songwriters, the Committee expressed concern about how the big three record labels, which I mentioned earlier and which wield huge market power, own large parts of the music publishing business too, and how that might influence the way in which revenue from streaming is distributed. If the big three make more profit from their rights in the recording than they do from their rights in the publishing, there is a disincentive for them to pay songwriters a competitive share of streaming revenue. The publishing right ought to be competing for more value against the recording, but it appears to be stifled by the problem of ownership.
At this point, I want to praise the Government for noting the concerns expressed in our Committee’s report about the impact of monopoly power and cross-ownership in the music industry, and for referring the matter to the Competition and Markets Authority for a study of potential market failure. They deserve due credit for doing that. Let me say to the Minister that whatever the outcome of today’s debate, reform is needed. I hope that he and the Government will continue to “lean into” this issue and press the big three record labels to come to the table, acknowledge the issue and offer solutions, rather than remaining—as they occasionally seem to be—in denial. Perhaps he will say something about that when he responds to the debate.
The third major provision in the Bill would allow for contract adjustment when someone, often at the beginning of their career—we all know constituents like that, desperate for a chance to have their music heard—enters into an agreement which eventually results in a payment to them that is disproportionately low in comparison with subsequent revenues derived from the exploitation of their music. This right would strengthen the position of the weaker party entering into such an agreement, and it would encourage rights holders to ensure that agreements were fair and equitable in the first place, as ultimately the songwriter or performer would be able to appeal to the copyright tribunal to adjudicate on that contract.
The fourth and final provision would give UK songwriters and artists a right that is available in other jurisdictions, including the United States, but not in the United Kingdom. If after 20 years they are dissatisfied with the efforts being made by record labels or publishers—and I am glad to say that this would apply to Dame Vera Lynn, were she still with us—musicians could give notice of their intention to reclaim their rights to exploit their music, or transfer that right to another label or publisher that might do a better job than the existing one.
The importance of this proposal was highlighted very recently in the case of the UK recording artist Four Tet. Dissatisfied with the amount of money he was getting via his record label from streaming, he engaged lawyers to challenge his contract. The response of his label has been to remove his music altogether from streaming services, effectively a restraint of trade for that artist. His recording contract predated streaming. Under the provisions of my Bill, he could give notice that he intended to reclaim his music. This would incentivise labels to do better deals with artists—and, in fairness, many independent labels do have better deals with artists nowadays, often taking rights for 15 years rather than the lifetime of copyright, as has been the tradition.
Let me now anticipate some of the concerns that Members may have. I welcome their interest in today’s debate, but if they have been following the debate outside the House, they will know that a number of issues have been raised. It has been said, for instance, that the UK music industry creates a great many jobs as well as growth and exports, and is an important part of the UK’s soft power abroad. Why, then, should we rush to introduce legislation that could affect that world-leading status? I remind hon. Members that one in 10 streams originates in the UK, but only around a twentieth of streaming income comes back to the UK. Far from undermining our position, my Bill seeks to bring much of that lost income back into the hands of working British professionals.
This is an evidence-based reform. I know some in the music industry say we need more evidence—I am all for evidence—but it would have been helpful if the record labels and the British Phonographic Industry, after two requests from the previous Secretary of State for Digital, Culture, Media and Sport, had supplied the evidence that the Intellectual Property Office asked for and had volunteered some data on their royalty distributions. Why, even after the Secretary of State twice told our Committee they should do that, did they not provide the evidence? If they are going to say we need evidence-based reform, they need to supply the evidence.
Members may have seen a recent piece from the former chief executive of EMI UK suggesting that measures in the Bill, although well intentioned, could undermine the recovery of the UK’s music sector following the impact of the pandemic. That is a slight fallacy, because in fact the pandemic has had no overall effect on the recording industry. Streaming revenue actually grew by 20% in 2020. The sad fact is that EMI is no longer a British-owned company, much to my and others’ regret. Inexplicably, the chief executive appears to be conflating the recording business with the live business, which has been decimated by covid and emphasises even more why musicians need to be paid for their recorded music.
Some hon. Members will have seen the concern expressed about independent record labels, which may invest the most in new and emerging musical talent. Would my Bill reduce the amount of funding that smaller labels have available for supporting fledgling artists? The chief executive of the Association of Independent Music made a speech to the European Union five years ago calling for these exact measures to be implemented across Europe—that person was representing artists at the time. It is interesting that someone says there is not enough evidence, yet five years ago they were calling for the very measures I am calling for today. Plenty of evidence has accumulated in the meantime.
It is important to say that equitable remuneration can be applied in such a way as to take account of smaller independent labels that already have ethical business practices. Of course, in practice, they can and should operate in that way by agreement.
Colleagues will also have been told there is no general consensus in the music industry on what the impact of introducing equitable remuneration for streaming would be, and the argument goes that the Government are therefore right to undertake an extensive programme of research with all parts of the industry. I make it clear that I welcome the fact the Government are committed to undertaking this work, but I call on the record labels to collaborate and co-operate fully and to provide the information required for the Government to get a grip on the details. That does not preclude allowing the Bill its Second Reading and allowing it to go into Committee and the subsequent parliamentary stages, which will take a long time in any case, where the research can inform amendments and the Bill’s passage. The Government ultimately have control of the timetable.
Some have suggested that reintroducing equitable remuneration might have the unintended consequence of some independent artists receiving less money from streaming because session musicians would be entitled to be paid. In fact, fully independent music accounts for a very small proportion, probably 6%, of the total market, and fully independent artists who experience success are the ones making the most from streaming. The administration of ER may be cheaper to such artists than their current distribution deals. In any case, it is likely that any impact would be marginal, and it would be entirely possible to adapt the proposal to meet any concerns that arise.
Another concern that has been mentioned is that equitable remuneration could see record companies offer worse contracts, reduce advance payments to new talent or disinvest in the UK to make up for the loss of revenue from streaming. The Committee heard that advance payments ultimately keep artists in debt for a long time, so perhaps a cooling effect on the size of advances would not be a bad thing. As for companies, which are sometimes making 20% profit margins in the streaming era, with none of the costs associated with distribution or manufacturing, saying that they will pass any cut to that margin on to their own artists, that is surely the strongest possible argument that there is something very wrong with competition in this market. Anyone who believes in competition in this market should note that approach.
It has also been said that multinational record labels might decrease their investment in the UK if the streaming market became less competitive, but actually these changes will make the UK market much, much more competitive. The music industry is characterised best currently as an oligopoly—that is clear to all. One company may control as much as 40% of the market. Giving artists more control over their rights and letting those rights change hands more freely will hugely open up the market to smaller independent labels and artists. When changes were made in 2003 to copyright in relation to film, similar points were made, but we have seen the burgeoning expansion of the British film industry since that point, and I want the same for music.
Ownership of copyright, as with publishing a book and so on, does extend in the case of composers and songwriters beyond the 75 years after death, so it does apply to their estate. In the case of recording artists, it applies for 70 years after the date of the recording. It was extended by 20 years in an initiative that my hon. Friend the Member for Perth and North Perthshire and my right hon. Friend the Member for East Yorkshire supported in the mid-2000s, and that is why it is 70 years rather than 50 years.
I am immensely proud of the contribution that British musicians and songwriters have made to the culture and economy of the UK. Anyone who has watched the recent clip of The Beatles documentary where, out of the void, Paul McCartney conjures into being the classic song “Get Back” after only a couple of minutes can only be stunned by the sheer genius and sweet mystery of musical creation. That tradition of great British artists, musicians and songwriters continues to this day, but it is threatened if we do not adapt our legal structures to ensure that artists, composers and songwriters are properly paid when their music is played, in whatever format develops. Some with vested interests to protect would almost have us believe that this well-researched proposal, based on a groundbreaking parliamentary Select Committee report, agreed unanimously on a cross-party basis, would lead to some sort of anarchy in the UK music industry. There is an element of hyperbole and panic in their response. Much as I love that seminal British punk record of rebellion, this Bill is not about anarchy in the UK; it is about equity in the UK music industry, and I ask the House to support its Second Reading so that we get on and scrutinise it in the detail that such a serious proposal deserves.
It is a challenge I happily accept. As a result, we probably have similar tastes in music, although not identical. We grew up during the same era. Where we do agree is that we both share a love of music —it is tremendously important to me. It is also tremendously important to this country; we are exceptionally good at it and have been for many years. The music industry’s importance to the UK economy is frequently cited—as the Select Committee points out, it contributes more than £5 billion in gross value added—and we are the second biggest exporter of music in the world, which does an enormous amount in terms of global Britain and the projection of our soft power. The music industry is a huge success story.
The UK’s exports have great potential, but it is worth my flagging the fact that the UK’s music share is beginning to decline: in 2015, we took 17%, but that has now fallen to 10%. That is because of the growth of new markets—in particular, Latin America and the developing economies—and the advent of things such as K-pop. I do not know whether the hon. Gentleman is a fan of K-pop; I have to say that it slightly passes me by, but I recognise that it is extremely popular.
The hon. Gentleman and I have followed the music industry for many years. He declared his interest as a performer and songwriter—indeed, I have heard him play many times—and I should declare that my son works in the music industry for Columbia Records, which is part of Sony Music. I have learned a great deal about the economics of the music industry from him, but my love of music and involvement in the industry pre-date his birth by quite a number of years.
The hon. Gentleman talked about when he first got involved in music industry issues; I go back rather further: my first involvement was 35 years ago when I supported the music industry campaign for the introduction of a blank-tape levy. I fear that some in the Chamber may not even know what a blank tape is, let alone a levy on one. It dated back to the years when—this is guilty admission time—one could sit with a cassette tape recorder waiting for a song to come up on the top 20 and then record it. That was piracy and a breach of copyright and was to be condemned. When I learned more, I recognised that it was not to be encouraged and that there should be a levy. Some in the industry still advocate a levy, albeit not on blank tapes but on devices such as iPods or smartphones.
Blank tapes were an early example of the threat to the music industry from piracy, which of course increased dramatically with the advent of the internet. The hon. Gentleman talked a little about the threat that emerged from illegal downloading and, in particular, peer-to-peer file sharing and the growth of companies such as Pirate Bay and technology such as LimeWire.
I recall, when I was its Chair—a little while ago now—taking the Select Committee to see Lucian Grainge, about whom I want to say a word because, although the hon. Gentleman did not name him, he referred to him. Lucian Grainge is the chief executive of Universal Music and is going to bank a huge amount of money this year because Universal Music has just conducted a very successful initial public offering and sold a 10% share. As chief executive, he is going to profit from that and we should celebrate that: Lucian Grainge is a British music industry executive who has built Universal Music into the most successful company in the world. As a Conservative—somebody who can celebrate that success—and a British citizen, I am delighted that he is going to do so well, but the whole company will do well, too. It is a remarkable success story, because when we went to see him back in 2008-09, he told us that he was seriously concerned that the industry itself was going to die, such was the extent of the threat to the industry at that time as a result of piracy. Beginning in the early 2000s, there was a 15-year decline in music industry revenue that was directly attributable to piracy.
The right hon. Gentleman mentions Lucian Grainge; he may be aware that were an artist in Britain to produce a song and get 1 million streams, they would receive around £100, so to receive the £153 million that Lucian Grainge gets, that artist would need 1.5 million million streams. While Lucian Grainge may be a great corporate man, making £3 million a week, he has never produced any music that we would ever want to listen to. Surely the right hon. Member cannot justify that level of greed when there is poverty in the spring of our creativity across this land.
When, about 15 years ago, I attended the Music Industry Trusts Award dinner where Lucian Grainge was honoured, I heard from the artists whom he had spotted and signed up. In particular, I remember Take That, who said they became as successful as they did due to Lucian Grainge’s support. Yes, he does not necessarily play an instrument—he may do so in a not particularly professional way, although I may be doing him an injustice there—but he is an extraordinary talent in the industry. He does what labels are there to do: he goes out and finds talent, invests in it, builds it up and makes it into the global stars whom we celebrate.
I have no doubt whatsoever that Lucian Grainge is an extremely talented music industry executive, but would he be anywhere near as successful without many of the artists out there now who, having been locked down in their houses for almost two years, unable to make any money through live gigs, are living on poverty wages and getting barely anything from streaming revenue?
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.
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.
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.
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.
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 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.”
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—
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.
Of course I completely accept that, in the vast majority of cases, contract law should stand. If two people have entered into a contract, that is their business, and it is for nobody else. However, we have repeatedly, in lots of other industries, decided that there are occasions when exploitative contracts have been entered into, because there is not an equality of arms between both sides. For instance, in financial services, we legislated a few years ago to strike down a whole series of mortgages that people entered into, because they were not entered into on a fair basis. My anxiety is that the world at the moment is really stacked against lots of artists. We repeatedly seem to expect that their music should be free, and that seems unfair.
Oh, goodness, there were a number of points there. I am grateful to the hon. Gentleman for recognising that we should be very wary about stepping in to interfere with voluntarily agreed contracts. Yes, if there is evidence of exploitation and abuse of a dominant position, that may be a circumstance where we should. Actually, that is one of the areas where I think the hon. Member for Cardiff West has done us a service in allowing us to look at this issue. Action does need to be taken, and I know that my hon. Friend the Minister, in his response, will talk about what the Government are doing to address some of these concerns.
Before I finish, I want to continue to talk about what the hon. Member for Cardiff West is proposing. I have talked about the revocation and adjustment of contracts, and he is also keen for greater transparency. I think the labels are doing quite a lot to release information and make sure their artists can see the way in which the economics is working and how they are being remunerated. However, the hon. Gentleman is going further even than many of the provisions advanced by the European Union. Some of the information he wants is simply not available and, for instance, the involvement of the tribunal in all these cases would lead to a huge increase in administrative costs.
I pay tribute to some of the more far-sighted labels that are already addressing some of the concerns; they are not all doing so. The Select Committee, in its report, particularly talked about the initiative by Sony. It is by Sony; I do not say this just because my son happens to work for Sony. It has brought in a programme called Artists Forward in which it has essentially written off unrecouped balances for artists signed before the year 2000. That has been followed by some of the smaller labels, and the Select Committee rightly paid tribute to Sony and called on the other major labels to follow suit, which I think would be a good thing.
I do think that, even though the labels are not perhaps the villains of the piece that some have suggested, they could do more to try to ensure that there is fairer distribution and that their artists receive more money. In that respect, I think the Government response to the Select Committee report was right in saying that we need both to have working parties to bring together the Government, the IPO and representatives of the industry to look at these initiatives, and at the same time to invite in the CMA to carry out a market study. I am unhappy about what the hon. Gentleman is proposing, but even if I was not, I think I would say that it is premature to start legislating when that work is ongoing and we do not know what the outcome is going to be. It is sensible that we wait for that work, which is taking place now, before we reach any final conclusions.
On the point about markets, I was reflecting on the comments my right hon. Friend made about this being a statutory measure to allow a review of contracts. Is there a danger that that could create a market distortion that would actually diminish the number of new contracts being set up, because the music industry would see, in 20 years’ time, artists who are successful going to a different provider?
My hon. Friend is entirely right, and the labels are very anxious about that. When they reach agreement with an artist at the moment, they have, written in a legally binding contract, a certainty that would be removed if we suddenly gave the right to one party to say that, after a certain period, they could essentially just tear up the contract. It would create uncertainty, which is bound to be a disincentive to signing new artists, so I think my hon. Friend is absolutely right.
Where I think there is more work to be done, and I hope the CMA market study may bring this out, is in an area that is not covered in the hon. Gentleman’s Bill, which is the power of the digital service providers. They are very dominant, and the industry has been complaining for a long time about what it terms the value gap, which is the amount of money retained by the platforms and not given over to the industry. I have to say that YouTube is a particular offender in this. It takes advantage of this thing called safe harbour under the Digital Millennium Copyright Act and as a result gives over to the rights holders only a fraction of the revenue it receives, particularly compared with Spotify, which has a better record in this area.
Surely the greatest distortion in the market is the fact that artists are not getting a fair day’s pay for a fair day’s work. This is fundamentally about fairness, and the Bill will help break down monopolies. One such artist is Tim Burgess, who has been very supportive of my hon. Friend Kevin Brennan. My hon. Friend is on his listening party on
I just say to the hon. Gentleman, as I said earlier, that the revenue share going to artists has gone up, not down. I do not think it is as immediately obvious as he says that they are being deprived unfairly of income. This is an incredibly complicated area, as I think everybody will recognise. Before we reach any conclusions, let us have the CMA carry out a proper market study, let us have the working groups and conduct the discussions, and then we will see the evidence. However, if the hon. Gentleman looks at the report produced by the IPO on earnings in the creative industries, I do not think he will find evidence to support what he has said.
There are still issues to be addressed. I welcome the initiative of the hon. Member for Cardiff West in bringing the Bill forward and allowing us to debate the matter. I am pleased that the Government have taken on board the fact that concern exists and want to find out more detail about the economics of the industry and the facts. I look forward to that, but the measures that the hon. Gentleman has brought forward would not benefit the industry, and they might well result in some of the future stars we are going to rely on if we are to sustain the enormous success of our industry not being found, because the labels will be deprived of the money that they need to invest to find those artists of the future.
I refer Members to my entry in the Register of Members’ Financial Interests.
It is a pleasure, as always, to follow Mr Whittingdale. We have been together in so many of the various torturous debates about copyright reform, and I think we all still bear the scars of the Digital Economy Act 2017. I just hope that the record labels that have written to us so assiduously in the past few weeks sometimes remember what we did for them when the dark times started to descend on the sector and the industry in the early 2000s. Members such as the right hon. Gentleman, my friend Kevin Brennan and several others across the House stood up for the music industry, made sure it was put back on a proper basis and created the political conditions for the industry to rise again out of the mess of digitisation. I just hope that is reflected and remembered in the course of this debate.
It is a pleasure to speak in the debate, and I congratulate my hon. Friend the Member for Cardiff West on this excellent Bill. I have been waiting 20 years to see a Bill like this; it is great that we are now considering it. I have been a bandmate of the hon. Gentleman’s for about 20 years in MP4, the world’s only parliamentary rock band. Where he may be short in stature, he is mighty in musicality. If conditions had been just that little bit different years ago, when he was starting out rehearsing and starting to play the guitar, he could have been one of these featured artists earning so much money from being a successful recording artist. I recommend that colleagues listen to his solo album, “The Clown & The Cigarette Girl”, to hear the quality of his song writing. Lots of people ask, “What does this musical moonlighting mean for the future of MP4?” Well, we are the only rock band in the world that can sustain political differences as well as musical differences, so I think we can maybe just put up with a bit of musical moonlighting. The hon. Gentleman is Kevin Brennan, not Robbie Williams, so I think we will get by.
I am going to do something very unusual in the context of the past few weeks—something that on “Yes, Minister” might have been called “brave” or “courageous”. I want to talk about my “second job”, as several of my friends in the press have portrayed and described it. It is a second job that I have not done for 20 years, that I never spend any hours on, and that I cannot stop: because I am a former featured recording artist, I still receive royalties for my recorded works. After 20 years, I have to say that they have very much diminished, and with the onset of digitisation and streaming they have gone right down, but hey—they supplement the MP’s wage and I am grateful for them. I think I deserve them; I spent hours, months and years putting together those albums and that product, and I think it is right that they retain that value. They have to have intrinsic value.
That is what this is all about: the value of the imagination and the creative process, the virtue of the songwriting, the craft that goes into engineering and designing these wonderful products that are a narrative of our human experience and reflect our emotions. Where would we be without the songs? Where would we be without the songwriters? How would we enjoy our day-to-day life and activity without songs in our head, songs to enjoy, songs to listen to? If there is one thing this House can do, it is make sure that the people who produce and design these wonderful pieces of art should get proper remuneration and proper reward. If we can do anything in this House, surely we must reward our artists.
We are lucky in this country: we are particularly good at this. The UK dominates the world creative and artistic scene. It does not matter whether it is television, film or music—we are at the top. That is because we are very, very good at it, but we also have the political conditions to allow it. Copyright is a brilliant thing. It is about intellectual property—it is about making sure that that right is accepted and known. We have to make sure that we continue to adapt and develop the political infrastructure that lets talent and creativity thrive, develop, mature and express itself. That is one thing that we can do in this House. I really hope that we will look at the Bill today, see what we can do for our artists, and support it.
I signed a record contract. I was signed to two major record companies: I signed to Chrysalis Records in 1987, and it was taken over by EMI in the early 1990s. We did quite well during that period: we sold 1.5 million records, we had modest success in the UK with two top-five albums, and we had a couple of top-five albums in Scandinavia and Germany. I never earned a penny from any of my recordings. After selling all those records, I never received a penny. That is because as a contracted artist who had our rights given to one of the major record companies, we remain unrecouped, which means that we never repaid the investment from our record company. When the record company tired of us trying to secure that breakthrough and dropped us, we were dropped unrecouped, which meant that we no longer had a record contract and still owed money to the record label. We sold 1.5 million records!
Those were the good times: 1987 was the start of the CD revolution, when sales went through the roof and record companies lived in almost fantastic, egregious excess. They were amazing times, but even then we could not make money from records—never mind today, when streaming has come in and there are no longer physical sales. To give a sense and a feel of what this is all about, I remember when we were signed: we came into Heathrow airport and there was a battalion of limousines to drive us into the plush, swanky offices in Oxford Street. It was not that bad.
That was what it was like, and it is not much different today. To have success, an artist needs to achieve and secure album sales of about 200,000 or 300,000. It is at that point that they start to repay their debt to the record company. They then get to the place where royalties start to come in. During the ’80s and ’90s, royalties and sales came in and came in, and a lot of bands managed to get to that level and earn significant sums from their records. Those were really the good times.
I want to talk a little about the record contractual arrangements. I have no problem, difficulty or issue with the model that is in place: this idea that you are signed to a record company, and you give over your rights as an artist and creator to the record company in order for it to do the promotion and distribution. That is utterly fine and nobody really sees anything wrong with that. It will try to make to make sure that the contractual arrangement will monetise that for you—to sell it, promote it and make sure it happens.
Proceedings interrupted (