As MBW reported earlier today (May 17), the updated essay from IMPALA suggested a number of potential changes to the typical streaming royalty model adopted by various music platforms in 2023.
One of these potential changes was always like to draw the most scrutiny within the music biz: To “reform allocation of streaming revenue.”
IMPALA’s report argued that record companies (and their artists) should get a larger slice of the overall music streaming “revenue pie” generated by DSPs.
Labels should get this larger slice, said IMPALA, to cover the “risk and investment” taken on by record companies in their pursuit of breaking artists in the modern era.
The controversial ‘part two’ to IMPALA’s argument?
For the recorded music industry’s slice of the “streaming revenue pie” to increase, it would inevitably mean that another slice of this “pie” must reduce. And there are only two other ‘slices’ available: (i) The money paid by streaming services to music publishers and their songwriters; and (ii) The money retained by streaming services after paying music rightsholders.
IMPALA’s report seemed to focus on one of these two ‘slices’: The money paid by streaming services to music publishers and their songwriters.
The trade body wrote in its report: “[We] ask whether the label share [of streaming revenues] is being undervalued compared to other parts of the sector, which are experiencing increases.”
IMPALA wrote these words under a re-publishing of recent data that showed the music publishing sector’s share of the UK market’s streaming “revenue pie” increasing from an estimated 8% in 2008 to an estimated 15% in 2021.
In the same expanse of time, the recorded music industry’s share of the “revenue pie” grew from 51% to 53%, said the data, while streaming services saw the share they retained after paying music rightsholders reduce from 41% to 32%.
Source: UK’s Competition and Markets Authority / IMPALA’s May 2023 report
UPDATE: Mark Kitcatt, President of IMPALA and Chair of Streaming Working Group, has told MBW in a statement: “As chair of IMPALA’s streaming working group, I would like to clarify that our plan calls for services to put up subscription prices (and stop dilution) and pay labels more to shore up risk and investment. At the same time we ask all labels to pay their artists modern digital royalty rates. Our plan also seeks a reallocation of revenue between tracks as this article reports at the end and includes a host of other proposals.
“To avoid doubt, we do not call for a reduction of the share to publishers. The references to how the publishing share has increased (from recent UK reports) are included to underline the poor progression of the master right share for artists and labels, rather than call for a reduction of what publishers earn. We invite everyone to read the full plan here and we flag the following extract which summarises our overall view: ‘Once we grow revenue we can make a bigger pie, instead of fighting for the reallocation of one that’s simply too small. Every part of the music business should be paid properly…’“
IMPALA’s questioning of a potential “reform” of the “allocation” of streaming revenue – vis à vis music publishing and recorded music – has predictably not gone down well with the US-based National Music Publishers’ Association (NMPA).
After reading the IMPALA report, NMPA President & CEO, David Israelite told MBW today: “The IMPALA report implying that songwriters should receive less from streaming models is irresponsible and offensive.
“For years music industry leaders have worked to dispel the zero-sum game approach where labels and publishers fight with each other over splitting up the pie instead of working together to grow the pie.
“The IMPALA report implying that songwriters should receive less from streaming models is irresponsible and offensive.”
David Israelite, NMPA
“The value of songs cannot be overstated. There is no industry without them. Only in the overly regulated digital streaming economy must songwriters fight constantly for less than they rightly deserve.
“We are proud that NMPA has significantly increased what songwriters and music publishers are paid from streaming models. We do not see that growth as coming out of what is fair to record labels and artists. We will continue to find ways to grow the streaming pie and ensure all creators benefit from the growth of the music industry.
“We will never go backwards, and we will never let stand rhetoric that attempts to pit creators against one another instead of against the giant tech companies who are the ones who should pay both fairly.”
In the US, the NMPA has successfully fought to secure a bigger share of the streaming “revenue pie” for its music publisher members.
The Copyright Royalty Board (CRB) recently accepted a (near) music industry-wide settlement that has improved songwriters’ streaming royalty rates in the country effective January 1, 2023.
The settlement – known as ‘Phonorecords IV’ or ‘CRB IV’ – will see songwriters and music publishers paid a headline mechanical royalty rate of 15.35% of a given interactive streaming service’s US revenue by 2027.Music Business Worldwide
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