According to IFPI’s annual global music report, streaming is now established as the most prevalent and significant format in the industry. When the European Parliament Committees on Culture and Industry recently adopted their respective opinions on the draft EU copyright directive both Committees proposed that EU member states should guarantee an unwaivable remuneration right for performers when their work is made available on on-demand streaming services.
Performers’ Right to Remuneration
Pursuant to the Information Society Directive, all performers have an exclusive right of making available the fixations of their performances. However, when making a record, the artist or performer generally transfers and assigns to the record label “all present and future rights in and to the recording in perpetuity throughout the universe“. The artist or performer thereby agrees that such rights shall be the sole property of the record label and that all remuneration payable to the artist or performer will flow through the label. The label will then use such monies to recoup recording costs and advances paid to the artist or performer before paying out to the same the agreed royalty (if any).
However, under International and European laws* performers, whose performances appear in a recording, have a right to equitable remuneration for the broadcast of their recordings to the public. Such remuneration right is administered by collecting societies representing performers, such as PPL in England or SAMI in Sweden. Generally, the right to remuneration from PPL or SAMI is considered unwaivable and is thereby not transferred from the artist or performer to the record label. When a recording is broadcasted on television or the radio, the performers on that recording will therefore be entitled to their share of PPL or SAMI monies directly. As artist royalties are payable subject to the label’s recoupment of advances and recording costs etc., income from collecting societies such as PPL or SAMI might be the only monies an artist sees during the first years of its career.
*By way of example, Article 12 of the Rome Convention; Article 15 of the WPPT; and Article 8 of the European Directive 2006/115/EC.
Call for an Unwaivable Remuneration Right
When performers were granted the right to equitable remuneration through legislation, streaming services such as Spotify and Apple Music did not exist, and as of today, there is still no statutory right to remuneration for artist and performers when their performances are exploited through streaming services.
The right to exploit the performances through streaming services is instead covered by the exclusive (and assignable) making available right given to performers through Article 3.2 of the Information Society Directive. As the practice in the record industry is that all exclusive rights are transferred and assigned to the record label, the income from streaming services becomes subject to the terms of the recording agreement.
As a proposed solution to this issue, several rights organisations around Europe have called for a European initiative to guarantee that performers, in the event that they transfer their exclusive rights to their performances, enjoy an unwaivable right to receive equitable remuneration for the making available of their performances through on-demand services.
When the European Parliament Committee on Culture and Education and the Committee on Industry, Research and Energy (Committees) published their opinions to the draft EU copyright directive on 4 September and 1 August respectively, both Committees suggested a solution in line with the European rights organisations’ proposal. These Committees, that have an advisory role to the Committee of Legal Affairs on this matter, both proposed to include a new Article 14a to the directive stating that “Member States shall ensure that when authors and performers transfer or assign their right of making available to the public, they retain the right to obtain a fair remuneration derived from the exploitation of their work”.
Furthermore, the new article holds that such right shall be unwaivable and that the administration of the right shall be entrusted to the performers’ collective management organisations, giving PPL, SAMI and equivalent rights organisations the mandate to collect the equitable remuneration.
Who Will Pay?
Even though the Committees only have an advisory role, the proposal certainly raises some interesting thoughts on how the streaming evolution has affected the income streams in the music industry. Several questions remain unanswered though. Not the least concerning is which body will ultimately be responsible for the cost of this equitable remuneration: the consumer (subscriber); the distributor (streaming service); or the record label? If the labels’ share of streaming income is reduced by the amounts payable to performers as equitable remuneration, the labels might find themselves in a situation where they in fact pay the performers twice for the same exploitation.