UK streaming inquiry report calls for ‘right to recapture’ copyrights after 20 years – Music Business Worldwide

Yesterday, MBW broke the news that an impending report from an inquiry into the Economics of Music Streaming in the UK contained two key recommendations for the British government that were bound to rattle the major music companies.

Our sources were typically spot on: the report, published by the UK Parliament’s Digital, Culture, Media and Sport (DCMS) Committee, today (July 15) suggested exactly what we said it would.

The Members of Parliament (MPs) who orchestrated the inquiry recommend that the British government implement a right for artists to earn royalties via ‘equitable remuneration’ from music streaming platforms.

The report also recommends that the government refer a case to the UK’s Competition and Markets Authority (CMA),  “to undertake a full market study into the economic impact of the majors’ dominance”.

Buried further within the report, however, is a recommendation that could prove to be the most significant of them all.

The DCMS Committee recommends that the British government “expand creator rights” by introducing a “right to recapture” works after a period of 20 years – a duration the report states “is longer than the periods where many labels write off bad debt but short enough to occur within an artist’s career”.

Introducing this right, states the report, “would create a more dynamic market for rights and allow successful artists to go to the market to negotiate better terms for their rights”.

Here’s the entire relevant passage: “We recommend that the Government concurrently expand creator rights by introducing a right to recapture works and a right to contract adjustment where an artist’s royalties are disproportionately low compared to the success of their music into the Copyright, Designs and Patents Act 1988. These rights already exist elsewhere, such as in the United States, Germany and the Netherlands, and would give creators greater leverage when negotiation contracts with music companies. We suggest that the right to recapture should occur after a period of twenty years, which is longer than the periods where many labels write off bad debt but short enough to occur within an artist’s career. This would create a more dynamic market for rights and allow successful artists to go to the market to negotiate better terms for their rights. The right to contract readjustment should similarly be implemented as soon as practically possible to ensure that rights for UK creators do not fall behind rights for European creators.”

Unfortunately, the choice of terminology in the report risks leaving readers a little confused.

Referring to recapturing of rights for “works”, as it does in the first instance, would suggest the report is referencing songs, or music publishing rights.

Yet adding that such a change would “allow successful artists to go to the market to negotiate better terms for their rights” seems more like a nod to the recorded music rights that acts sign over to record labels.

A “right to recapture” already exists in the US, where songwriters have the right to recapture the rights to their works after 35 years, if those works were published after 1978, in accordance with a provision in the Copyright Act of 1976.

The suggestion to write into a law a “right to recapture” works after 20 years in the UK comes as song catalog valuations continue to escalate.

Acquisitive UK-listed company Hipgnosis Songs Fund, for example, owns of a catalog that has been independently valued at $2.21 billion, having acquired 84 catalogs for $1.06 billion in the 12 months to end of March 2021.

The value of master recording rights, which come on to the market far less frequently than song rights, is also soaring, highlighted by Warner Music Group‘s recent $100m+ purchase of David Guetta’s recordings catalog.

If a “right to recapture” was ever eventually legislated in the UK – enabling more artists/writers to sell on their rights/works to interested parties, more frequently – we could potentially see more M&A activity in the rights market in years to come.

According to the streaming inquiry report, implementing such a right in the UK “would prevent the most valuable rights from accreting at labels with the most capital and create a market for recaptured rights, whereby companies would compete upwards on royalty rates and terms of recoupment”.

Elsewhere in the report, MPs gave more clarification on how they propose the value of songs – and the renumeration paid to songwriters, composers and independent publishers – should be rebalanced.

According to the report: “Despite being an important part in the music creation and music streaming process, song rightsholders are not effectively remunerated for their work.”

As such, the MPs “urge” the UK government “to consider how to ensure that the song is valued in parity with the recording”. If necessary, they say, the UK government should propose legislation alongside the introduction of equitable remuneration for performers … “to ensure that all creators benefit from these reforms”.

The government should also “urge the CMA to consider how the majors’ position in both recording and publishing has influenced the relative value of song and recording rights”, the report adds.

“In a short space of time, our members of parliament have been able to distil why the songwriter and artist are not being remunerated properly with some accuracy and we both applaud and support their efforts.”

Merck Mercuriadis, Hipgnosis

Hipgnosis Songs Fund CEO Merck Mercuriadis welcomed this section of the report.

“This is an impressive report from the DCMS Committee,” he said in a statement today.

“In a short space of time, our members of parliament have been able to distil why the songwriter and artist are not being remunerated properly with some accuracy and we both applaud and support their efforts.

“We are particularly focused on their recommendations that there be a full reset of streaming in law that gives songwriters and artists a fair share of the earnings, and that further to this the Government refer the case to the Competition and Markets Authority to undertake a full market study into the economic impact of the major music groups’ dominance.

“This is essential to ensure that the unhealthy control that the major recorded music companies have over streaming negotiations is addressed and to expose the fundamental flaws that exist within the music industry.

He added: “Our wish is that this will lead to songwriters being paid fairly and equitably and in a manner that recognizes that without the song we have no music industry.

“Ultimately if we are to make streaming truly fair for songwriters and artists it is critical that they are given a direct seat at the negotiating table, have exclusive rights, not merely a right to remuneration, and are paid in line with the share taken by record labels.”Music Business Worldwide