The government is launching an investigation into the music streaming industry following concerns that artists are not receiving fair royalties.
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It is believed that songwriters and artists receive significantly less money than record labels when their tracks are played on platforms like Spotify.
There are also reports that session musicians are not compensated for their streams.
To address these concerns, an industry working group will be established to examine the issue further. The government has been looking into music streaming since 2019 and, in 2021, acknowledged the existence of an "imbalance" in royalty distribution.
Dame Caroline Dinenage, chair of the Digital, Culture, Media, and Sport (DCMS) Select Committee responsible for investigating the music streaming industry, has welcomed this step towards addressing the grievances of musicians and songwriters who are being paid significantly less than what is considered fair.
However, she emphasized that substantial changes should result from this investigation rather than it being merely a forum for discussion.
'My money, my music'
In 2020, the government heard testimony from notable musicians like Nile Rodgers, a guitarist, producer, and songwriter, who revealed that record labels retain up to 82% of the royalties they receive from streaming services.
Sophie Jones, the chief executive of the British Phonographic Industry, expressed concerns that the government investigation into music streaming royalties might discourage investment, especially considering the potential rise of competition from artificial intelligence.
Jones stated that numerous studies have shown that streaming has benefited both consumers and artists, with record labels paying artists more than ever before.
Will Page, the former chief economist at Spotify, explained that the music industry is currently engaged in a debate about how money is allocated. Unlike a set payment per song play, artists receive royalty payments that can vary based on streaming methods and agreements with labels or distributors.
Page highlighted an alternative model called a user-centric payment system, which some argue could be fairer. Under this system, a person's subscription fee would be allocated specifically to the artists they listen to, making it "my money, my music."
However, Page expressed doubts about the impact of the working group, noting that there has already been a three-year-long inquiry by the DCMS Select Committee with various hearings and reports, and now the process seems to be repeating itself.
