Written evidence submitted by Basho Records

 What are the dominant business models of platforms that offer music streaming as a service?  Have new features associated with streaming platforms, such as algorithmic curation of music or company playlists, influenced consumer habits, tastes, etc?  What has been the economic impact and long-term implications of streaming on the music industry, including for artists, record labels, record shops, etc?  How can the Government protect the industry from knock-on effects, such as increased piracy of music? Does the UK need an equivalent of the Copyright Directive?  Do alternative business models exist? How can policy favour more equitable business models?

We are a small independent label specialising in Jazz and improvised music. WE invest in artists and produce a small number of high quality recordings each year. We sell our tracks/albums thought the online distributor The Orchard the dominant business models and platforms offering streaming services are Spotify, iTunes and Amazon. Other significant players for us include Facebook, Google Play, YouTube, TIDAL, Freegal, Deezer, Qobuz, Pandora and 7 Digital. For us this has created a new income stream, which is welcome, however it has resulted in the demise of the main physical product the CD. Some labels have tried older formats such as vinyl, but we have resisted this as vinyl is environmentally very damaging to produce and there are no known ways of recycling it safely. The only significant outlet for CD sales is at concerts, other outlets such as website and records stores now only producing a trickle of sales. The main problem is that the public perceive music now as a pretty much a free good and most are no longer willing to pay for it. Tracks that are purchased v. tracks that are streamed represent less than 1 per cent of all tracks consumed. The average value of streamed tracks is $0 .004 cents USD. A downloaded track yields 45 cents USD. If a whole album is downloaded we get $4.75 USD which is around two thirds or the distributor rate for the sale of a CD. The real problem is that the various platforms offering streaming seem to have got away with exploiting labels and creators in an effort to attract customers most of whom are not aware of the level of exploitation that is going on. The real issue is that the power of the major platforms creates an environment where musicians feel they must participate to get exposure. Streams have become a kind of advertising for the artist and very little of that advertising ever converts into consumers actually buying the music to listen to. The overall effect is that of devaluing the product. In my view the agencies that represent labels and music creators – PPL, MCPS, PRS have failed to recognise the value of music in an effort to prevent piracy. Piracy is no longer a problem as all of the music is readily available so there is no need for it. What is needed is for the agencies to renegotiate the terms with the streaming services and with the major labels some of whom are investors in platforms like Spotify. The revenue from streams for each individual subscriber should go to the music creators of those streams. At the moment subscribers actually pay for a service and much of that money is going to music that they never listen to with the bigger labels receiving the lion’s share. I realise that this may be a tall order especially given that many of the major platforms involved have pretty much infinite legal and lobbying resources to challenge any such move. However this I believe is the only way forward both in terms of fairness and sustainability. There are some consumers who consider themselves “ethical” by buying via Bandcamp. Bandcamp offers a service for artists to sell their music directly to the consumer. This is fine except that there is no mechanism within their platform to recognise and distribute payments to music creators, composers and the like. So when a label or even an individual sells on Bandcamp they are expected not to offer works that they have not composed – standards or covers – and the labels are expected to work out a deal with the artists to remunerate them. I am certain that this is not happening in many cases and the “ethical” consumers are being duped in many instances. This platform is however becoming increasingly popular for many artists and labels who feel they are being exploited by the other major platforms. A platform that could resolve the problems of distribution of royalties and be able to charge a fair price would be attractive. It is interesting that some Bandcamp subscribers are willing to pay more than the minimum price for their purchase so at least some consumers do seem to understand the concept of Fairtrade in this industry. The net result of this huge change in the industry has been a massive loss in terms of revenue to music creators across the board. The current pandemic has really shone a light on this problem now that creators find themselves unable to earn from live performance. Live performance has never been a great source of income for most artists many of whom rely on teaching and commercial work to support themselves and their families. In the past artists might have had some additional income from their recordings. This is no longer the case. The public have gained but it remains to be seen for how long the industry can sustain the current situation. My guess is that unless there is significant change independent labels which are the lifeblood of creativity will continue to disappear and go the way of record stores. This will result in less investment in artists and ultimately a serious loss of diversity and quality in music production as more investors leave the sector.

Christine Steuer Basho Records