YouTube and Spotify streaming sites are killing the music industry and a ‘complete reset’ is needed to give artists a fair reward, MPs warn

The music streaming model perpetuated by Apple, YouTube and Spotify is in dire need of a 'complete reset', an exhaustive MP-led inquiry has said. 

A highly critical report on the industry by the Digital, Culture, Media and Sport Committee, pointed out ‘critically acclaimed’ performers were getting ‘meagre’ money from streaming, with session musicians ‘frozen out altogether’. 

The eight-month inquiry raises 'deep concerns' about the position of the major music companies in the market, with several record labels posting record profits.

The report follows a number of musicians publicly criticising the small amounts they make from streaming services such as Spotify and YouTube, and added that the current situation was impacting the ‘entire creative ecosystem’.

The committee said artists should be given a legal right to ‘a fairer share of revenues’.

In the report, MPs called on the Government to introduce a system of equitable remuneration for streaming income - where performers have a right to receive a share without reference to their label contracts.

According to the Broken Record campaign, under the current system artists receive around 16% of the total income from streams, while record companies receive around 41% and streaming services around 29%.

The report follows a number of musicians publicly criticising the small amounts they make from streaming services such as Spotify and YouTube

The inquiry, which was launched following increased scrutiny prompted by the Covid-19 pandemic, received more than 300 pieces of evidence including from Chic star Nile Rodgers, Radiohead guitarist Ed O'Brien, Elbow frontman Guy Garvey and singer-songwriter Nadine Shah.

The situation for musicians has worsened due to their loss of earnings from live music as a result of the pandemic.

MPs heard how even for some successful musicians earnings from streaming alone were not enough to ‘keep the wolf away from the door’.

The report said a songwriter and composer who had written an award-winning song that had been streamed 137 million times on Spotify had only received a royalty of just £3,013. 

Chair of the DCMS Committee Julian Knight said: 'While streaming has brought significant profits to the recorded music industry, the talent behind it - performers, songwriters and composers - are losing out.

'Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.

'However, the issues we've examined reflect much deeper and more fundamental problems within the structuring of the recorded music industry itself.

'We have real concerns about the way the market is operating, with platforms like YouTube able to gain an unfair advantage over competitors and the independent music sector struggling to compete against the dominance of the major labels.' 

The DCMS' report calls on the Government to refer the case to the Competition and Markets Authority to launch a market study into the 'economic impact of the majors' dominance'

The DCMS' report calls on the Government to refer the case to the Competition and Markets Authority to launch a market study into the 'economic impact of the majors' dominance'.

MPs called for a ‘comprehensive’ reform of legislation and ‘further regulation’ to redress the balance for musicians and also to tackle ‘fundamental’ problems in the recorded music industry.

Members of the committee had ‘deep concerns’ about the ‘unassailable’ position of major music companies, saying the Competition and Markets Authority needed to investigate.

The report also pointed out that YouTube had a competitive advantage over many of its rivals because it is classed as a user-generated service, which makes it subject to different copyright laws.

It added that while consumers enjoyed cheap music on streaming, the short-term pricing structure put music at risk in the longer term.

Major record labels Sony Music, Warner Music and Universal Music appeared before MPs during the sessions, while tech giants Spotify, Amazon, Apple and YouTube also gave evidence. 

YouTube Music's global head of music Lyor Cohen said the organisation was 'deeply committed' to the growth of the music industry. Pictured: Cohen speaking with Dua Lipa 2018

YouTube Music's global head of music Lyor Cohen said the American organisation was 'deeply committed' to the growth of the music industry.

He said: 'We recognise the role that YouTube Music plays within the music industry and are deeply committed to helping it grow and thrive.

'In the last 12 months alone we've paid out more than four billion dollars to artists, songwriters and rights holders, 30% of which has come from UGC user generated , with fan-made videos proving to be an invaluable source of revenue.

'We are spearheading the twin-engine model of ads and subs, allowing music fans around the world to pay with both their wallets and their eyeballs.'

Geoff Taylor, chief executive of record labels association BPI, said: 'Labels are committed to ensuring that artists share fairly in the growth from streaming.

'We will carefully examine the findings of this report, but it is essential that any policy proposals avoid unintended consequences for investment into new talent, and do not imperil this country's extraordinary global success in music.