UK Musicians Propose a New Record Industry

Hello! Two weeks ago I wrote critiques of the Music Modernization Act but should’ve still pointed to the official website for the Mechanical Licensing Collective. Also, shout out to Kevin Erickson from the Future of Music Coalition, who directed me towards a couple of webinars to help musicians register for the organization. Now, let’s dive back into the United Kingdom’s cross-examination of the contemporary record industry.

The British parliament’s Digital, Culture, Media and Sport (DCMS) Committee announced an inquiry into the digital record industry last fall with a pretty broad scope of what it sought to investigate. Thus, a wide range of people was brought in front of the government, namely musicians like Nile Rodgers, heads of independent and major labels, the UK Musicians Union; representatives from Amazon, Apple, Spotify, SoundCloud (my employer), Twitch, and YouTube; British record industry trade associations; and the ministers themselves. Stuart Dredge at Music Ally did good work analyzing these panels and sifting through the various arguments and proposals being put on the table. The range of speakers makes it hard to find real points of unity, so I’m going to cluster these talks into a few buckets.

The first would be the artists: the UK Musicians' Union, PRS Music, the Ivory Academy, and the individual artists who spoke were all very fairly supportive of the equitable remuneration proposal that would treat streams on streaming radio and playlists akin to traditional radio. (This would allow for a 50/50 split between artists and labels on these payouts, rather than the current method, which is titled towards labels.) They also supported a move to the user-centric streaming model and for increased clarity and transparency from streaming platforms and labels. The core of the opinions expressed by these groups could be summed up in the #BrokenRecord campaign led by Tom Gray and the #FixStreaming campaign by the Musicians’ Union. These requests represented the most holistic point of view put forth in front of parliament, where critiques of the industry were matched with potential solutions. Artists speaking up were also prepared to hold a more combative stance given that it was their lobbying and fighting that put this inquiry to the committee. The other clusters were more limited in their respective governmental demands.

Record labels were split across multiple days, allowing majors to speak and then independents. The one-week distance between their hearings didn’t obscure the fact that both groups were using similar talking points. Neither were all that interested in equitable remuneration and simply asserted it would be “bad for business” without much grounding beyond arguing that musicians would make more money. Independents also roundly dismissed the idea of the United Kingdom adopting an American-like termination of copyright, suggesting that it would undermine the value of investing in artists if labels cannot profit off of them over four decades after an initial signing. Record deals are life deals, otherwise, the business falls apart.

The indies also stressed a desire for tax breaks and suggested that that would help them compete against major labels. An almost laughable idea when one steps back and thinks about the current highly globalized world of recorded music. Certainly can’t blame them for requesting tax breaks when given the government’s ear. Neither were all that interested in user-centric streaming and parroted the questionable talking point of it potentially costing too much money (for who exactly?), though UMG and Beggars Group were at least open to the idea. As I wrote earlier this year, the term “independent” might’ve held value decades ago but in 2021 there is a blurring of interests and these hearings made that clear.

The tech companies that were cross-examined lacked a real set of demands for the government. Instead, many just appeared to be ready to parry any potentially difficult questions and make sure not to get a bad soundbite. Thus, the most fun session was with SoundCloud, Twitch, and YouTube, and that was mostly just to see YouTube repeatedly state how much money they’ve made the British record industry as if that was the inquiry’s singular concern. They, and others, repeatedly mentioned how much money the industry made since their the arrival, and also that the threat of piracy is always peeking around the corner if subscription prices rise too high, despite there being almost no evidence of this when Spotify, Netflix, or other firms increased subscription rates. Aside from YouTube, none of the tech companies faced overly harsh questioning that couldn’t have been evaded with the talking points mentioned above. Now that the hearings have ended, everyone will wait for an official recommendation from the DCMS -- but that hasn’t stopped industry groups from lobbying.

Last month, a number of British musicians including Chris Martin, Jimmy Page, a Gallagher brother, Kate Bush, and many other big names signed a letter to support equitable remuneration for musicians. In March, the Musicians Union released a favorable write-up on the hearings, which tipped my eye to see just how closely the DCMS recommendations hue towards the #BrokenRecord and #FixStreaming campaigns, since they’re really the only groups that put out a comprehensive view on what should happen to the industry. Labels want tax breaks but otherwise seem fine with the government continuing to pay little attention to how it treats artists, and streaming platforms appear uninterested in even conceptualizing how to interact with the state. But, there’s more that could be out there.

Earlier this year, musician Rebecca Ferguson put out an online petition for the creation of a regulatory body to overlook the industry. Tom Gray tweeted in support of the idea and seconded the need for an ombudsman-like figure alongside audits and for regulation of the industry. These particular demands stuck out to me. Even though this isn’t explicitly articulated by the artists who spoke to parliament nor by the other artist groups, this is a great opportunity to introduce more permanent duties for the government to examine the record industry. There’s little thought that the music industry is “fair” or is looking out for the best interest of artists, so why not solidify that music can be a strong industry and still not be above government reproach in this moment of heightened awareness? The committee’s recommendation may not be so bold but it speaks to the organizing work and general frustration with the industry that such expansive possibilities are on the table.

Unheard Labor

In April, five members of the United States house wrote a letter to Merrick Garland, the U.S. Attorney General, to look into the “potentially unfair, deceptive, and anti-competitive practices” of Live Nation. The group of legislators mentioned the 2010 merger of Live Nation and Ticketmaster leading to over 80% of American ticket sales going through Live Nation, according to a report by the Government Accountability Office. Bill Pasrcell, Jr., one of the letter’s co-authors, is a long-standing critic of Live Nation, and back in 2009 released the BOSS Act to help with the issue of inflated secondary market ticket sales, and also calling for a breakup of Live Nation in a Los Angeles Times op-ed three years ago. I’m certainly interested to see how much traction this might gain during the Biden administration.

This piece of governmental news is a bit more local. The California legislature is currently looking at a bill called the FAIR Act, which would allow artists to exit their contract after seven years. The effort is being led by Irving Azoff’s Music Artists Coalition, the Black Music Action Coalition, Songwriters of North America, SAG-AFTRA, and The Recording Academy, along with the Future of Music Coalition signing onto the measure. In Billboard, Mitch Glazier, the Recording Industry Association of America (RIAA) CEO, comically argued against the law allowing record industry divestment from the state. There’s no world in which record labels abandon Los Angeles because an artist could now legally not be potentially bound by a single contract. Certainly, any piece of legislation that can amass such scare tactics by the RIAA should be greeted with some warmth.

A Note on Financialization

The Blackstone Group reportedly purchased eOne Music from Hasbro for just under $400 million last week. The private equity firm received the collective ire from the record industry when the Harry Fox Agency, which it owns, threatened to bring down the Music Modernization Act. Blackstone’s history with record labels goes back to the late 80s in helping finance Sony’s purchase of CBS Records but this eOne deal is certainly a disconcerting pick-up if the recent activities of HFA are any indication.

Downtown announced that it sold over 14,000 copyrights to Concord for over $300 million, with the former company now saying it’ll be leaning more into its label services business. Billboard additionally reported layoffs for Downtown’s Nashville employees due to the sale. This is unfortunate but also woefully underreports how often staff-cutting happens in these multi-million dollar deals that are masked over with bland corporate-speak. Hopefully, folks find solid new jobs.

Then, curiously, Warner Music Group’s oddly quiet Tempo Music Investments disclosed that the initiative, co-funded by Providence Equity Partners, purchased some parts of the catalog from Wiz Khalifa, Florida Georgia Line, and others. Details were sparse but it is worth noting that these deals happened outside of the public spotlight and while I try my best to document deals here, plenty could be occurring outside of public view.

6 Links 2 Read

The Case for Universal Creative Income - Li Jin and Lila Shroff

This is a curious essay by venture capitalist Li Jin and her co-author Lila Shroff. The basic idea is around companies providing “income” to creators to help stabilize their ability to create art or content. The authors spend a lot of time talking about Franklin Roosevelt’s New Deal programs and especially ones that helped artists but there’s no mention of unions or the social movements that helped inspire and fully realize those programs. They contrast proposing a private business UCI vs. a government-backed UBI, and even note the inherently undemocratic nature of the UCI as proposed since it wouldn’t be under the same kind of democratic control. Do give a read, a surprisingly interesting bit of work from the VC world.

FTC Nominee Lina Khan Fires a Warning Shot at Big Tech - "Potential Criminal Activity" - and Senators from Both Parties Love It - BIG / Antitrust Advocate Lina Khan, FTC Nominee, Hailed by Music Orgs - Billboard (Subscription)

Lina Khan is a bit of a rockstar in antitrust policy circles, so her potential FTC nomination is certainly exciting. Even a number of music groups, including our favorites Union of Musicians and Allied Workers, Music Workers Alliance, the Future of Music Coalition, and others came out in support of Khan’s appointment. There are certainly plenty of antitrust concerns within the record industry that the FTC could address if brought before them.

China Readies Tencent Penalty in Antitrust Crackdown - Reuters

China continues to flex its muscles over the tech sector. Alibaba’s been at the center of such ire, so do read the Financial Times reporting on Jack Ma’s disappearance from public life for more context. Government regulators eyeing Tencent is interesting given Tencent’s recent intermeshing with the global record industry (see: Spotify stock swap; investment in YG Entertainment). Though Ma might’ve been made an example of, Tencent’s CEO, Zhong Shanshan, reportedly China’s richest man, has shown more willingness to defer to the Chinese government and keep a lower profile, so it might remain in a commanding market position.

Social Music - CTM Festival

DeForrest Brown, Jr. continues to be one of the most compelling critics of the record industry, but also of us committed industry critics.

Goliath and Goliath: Asset Management and Ownership in the UK Economy - Common Wealth

An opening salvo from the progressive British think tank Common Wealth that dives into the world of asset management (Blackrock, Vanguard, and State Street), which own small chunks of nearly all major global firms. I learned a lot from reading this report and just how vast this part of the financial world has grown in the last few decades and excited about the group’s future research in this space.

'Pushing" Biden to 'the Left' - The Antifada

Perhaps one of the more clear-eyed assessments of America’s current political economy.