The three major music labels are operating “like a cartel” in the streaming era and the current system is threatening the future of music in the UK, according to evidence given on the first day of an inquiry into the impact of streaming on the music industry.
During the digital, culture, media and sport select committee inquiry into the economics of music streaming, MPs heard from musicians including Ed O’Brien of Radiohead, Elbow’s Guy Garvey, and Tom Gray of Gomez, who painted a bleak picture of artists struggling to survive.
Garvey said the “system as it is is threatening the future of music”, while equitable remuneration, increased transparency and user-centric streaming models were put forward as ways in which the industry could be reformed and made fairer for artists.
Gray, who is the founder of #BrokenRecord Campaign, said some artists were still tied to contracts that included antiquated clauses, such as a 10% damage clause, which saw labels work on the assumption that 10% of CDs would be broken in transport.
An artist’s share is then worked out from the remaining 90%, despite the fact in the streaming age barely any CDs are sold. Tom Frederikse, a solicitor and former producer, who also gave evidence, said in some cases the damage clause was as high as 25%.
“What’s very clear is over 70% of consumers think artists are underpaid. As soon as anyone sees this data and learns the terms of the payment deal, everyone comes to the same conclusion: it’s not right,” said Gray.
After hearing the evidence, Julie Elliott MP said it sounded as if the three major labels – Warner Brothers, Sony and Universal – were operating “like a cartel” because of what Gray called “suspiciously similar” artist contracts.
Gray referred to a recent YouGov poll which found that 77% of customers believed artists were not getting a fair deal, and reports that Universal recorded revenues of $1.14bn in the last quarter despite the global pandemic and economic downturn.
MPs heard that the huge profits seen by major labels were not trickling down to artists who, in the case of Nadine Shah who also gave evidence, were struggling to make ends meet in the streaming era. Streaming was worth around £1bn last year, however, artists had been reportedly paid only 13% of the income generated.
The musicians said artists were having to adapt to a streaming model that had rapidly replaced the system that existed when they were first signed.
O’Brien said when Radiohead were signed in 1991 there were huge imbalances but that the streaming era had exacerbated them. “It’s interesting to see your reaction to the testimony this morning because you’re becoming aware of the unfairness and the opaqueness within the business, and then you’re bolting on this digital model. And it’s not working,” he said.
Garvey said Elbow had recently shortened the intro of a track so that it would be more likely to appear on playlists. Gray told the committee that genres such as jazz and classical were struggling because their longer length tracks don’t suit the playlist system, which he said benefits easy listening and muzak.
Gray also told the committee he had heard of cases in which people who ran influential playlists on streaming platforms were being paid to include tracks, calling it a modern form of “payola”.
The inquiry continues and will hear the “perspectives of industry experts, artists and record labels as well as streaming platforms themselves”. The chair, Julian Knight MP, said the goal was to ask whether the business models used by major streaming platforms were “fair to the writers and performers who provide the material”.