In his first interview since announcing plans to step down as CEO of British labels body the BPI, Geoff Taylor has been talking to the Music Ally Focus podcast about the current state of the music streaming economy.
Unsurprisingly, he welcomed the recent decision by UK competition regulator the CMA not to launch a full market investigation of the industry, with the body having lobbied firmly against such a move.
“It’s always been our view that the streaming market is characterised by a high level of competition. You see a lot of competition between the different digital music services, all competing for users; a lot of competition between labels to have the best deals with those music streaming services; a lot of competition, obviously, between all the artists who are trying to succeed and get as much attention on those services,” said Taylor.
“And fans doing really well out of that because they’re getting an incredible deal. Prices that haven’t risen in 15 years, and more and more music available to them at the touch of a button. So we weren’t surprised at the top line: that those were some highlights the CMA found.”
He added that the BPI is not counting any chickens at this point. “We recognise this is just an interim market update. There’ll be a further consultation. We’re not taking any of this as final. But we were pleased to see some acknowledgments of some key characteristics of streaming, which we felt had perhaps been undervalued in the debate so far.”
Those include the CMA report’s findings that royalty rates for artists “have gone up significantly” in their label deals, and that there is now a wider range of possible deals and partners for them than ever before.
Taylor also cited the report’s finding that songwriter royalties have not been suppressed in the streaming age because it suits the major publishers’ parent companies to channel royalties towards recordings – where they take a bigger share – instead.
“The CMA found there’s no evidence for that at all. In fact, the evidence points in the opposite direction, because songwriters have seen the biggest increase in their share of the pie since streaming came along,” he said.
“And thirdly, there’s no evidence for the assertion that record companies are making excessive profits. In fact, if you look at their profits compared to the cost of capital, they’re in the normal range. And actually that’s because labels are spending a lot of their revenues on investment.”
The BPI recently published its own research on that front, claiming that British labels’ annual spending on A&R, marketing and promotion has doubled to £494.8m since 2016, accounting for 39.2% of their revenues.
“This industry – I’ve been in it for a while – when there’s growth, there tends to be a bit of a paroxysm of fighting over shares of the pie. It happened when the downloads business started: there was a debate over publishing royalties on downloads,” said Taylor.
“And this happened again with streaming. There can be a huge cost to that: that we’re all fighting amongst ourselves, and it means that we are unable to focus on some of the perhaps-bigger issues that could really help.”
So what are these issues? Taylor turned again to the CMA report, suggesting that its conclusion was that rather than labels being the cause of artists’ streaming problems, it’s more about “the hyper competitiveness of the market”.
“With a relatively fixed income of subscription monies coming into the streaming business, then an increasing number of artists fighting for a share of those revenues, and limited – finite – consumer time to listen. Those factors inevitably depress the per-stream rate. Not just that artists receive, but that labels receive,” he elaborated.
“Ultimately what we need to do is get more money into the music industry from digital platforms… And when I talked about the opportunity costs of having this debate, there are things that we should be doing that would increase the value of streaming for the benefit of everyone.”
What are those things? While labels must continue to strike “the best deals possible” with existing streaming services, Taylor thinks the industry must also be firmly focused on bringing new partners into licensing arrangements that suit the industry and its musicians.
“It’s not just about trying to get as much as you can out of Spotify and YouTube. it’s also about who are the new services, Peloton, TikTok etc, that you can license to bring new money in,” he said.
“When I’ve referred to the opportunity costs of the streaming debate, we haven’t spent the time we should have spent looking at our relationship with companies like TikTok. Are they paying what they should be paying for music?”
This is currently a sensitive topic within the music industry, as seen in a recent MBW article expressing labels’ impatience at the speed at which TikTok might transition from ‘buy-outs’ (lump sum) deals to revenue-share agreements.
Taylor acknowledged that the ‘value gap’ debate has traditionally been focused on YouTube, but appeared to suggest it should now be widening out to other new digital services too.
“Actually, there are new services that are using music that are either unlicensed or not completely licensed, where arguably they’re not paying what they should to the music community,” he said.
“That should be a big focus of ours, and we’re not spending in my view as much time as we should on those issues because we’ve been so focused on our internal streaming debate.”
It’s fair to say that this debate about streaming and artists has seen some strong views aired, and some significant tensions bubble between the different sides having their say. Interestingly, though, Taylor made a clear effort to praise the UK’s Broken Record campaign, led by Tom Gray, in the progress it has made bringing more transparency to the streaming economy.
“My view would be that actually, Broken Record and Fix Streaming etc, they deserve credit for the amount of focus they’ve managed to get on these issues. And there will be, I think, some really positive outcomes from that,” he said, citing the working groups set up by the British government to work towards a “kind of code of good practices on transparency”.
He later expanded on this praise. “The debate and Broken Record, etc, led to changes in the recoupment policies that major labels applied into their pre-2000 deals, and that’s very significant. That means that thousands of artists are now receiving streaming royalties that previously didn’t, because they were unrecouped. So I think a lot of progress has already been made.”
Music Ally has always argued that alongside the passionate arguments about what’s required to fix streaming for artists, there needs to be collaboration and compromise. Perhaps now we should add ‘cornflakes’ to that list too.
“Tom [Gray] and I had breakfast not that long ago, actually! He’s great to spend time with, and the same is true of Crispin Hunt, who also has been very – I would say – outspoken on these issues,” said Taylor.
“Sometimes I would say that he’s perhaps let his invective and rhetoric go further than the facts would fully justify. But he might not agree with that! Nonetheless, at a personal level we get on pretty well.”
“I do see him from time to time, and we have a very healthy exchange of views. We had lunch down at The Great Escape, which was very lovely on the beach there, and set the world to rights. So I think there’s still good dialogue going on. Of course we don’t agree on everything, but we are as I said making progress.”
Taylor declined to be drawn on what his next job will be after the BPI, but he did talk about some of the challenges and opportunities that he sees for his successor and for the BPI’s member labels in the next decade.
Those include intensifying competition for British music around the world, and the need that creates for investment not just from labels, but from the government.
“If we’re going to compete successfully against artists: K-Pop, J-Pop, Latin America, obviously from the United States and North America generally, we have to double down and invest more in the creation of new music in this country,” he said, pointing to the £494.8m 2021 spending.
“That is a very positive sign. What I don’t see yet is the government coming to the party and backing the music industry in the same way as it backs the film industry, the TV industry and the games industry in this country.”
Taylor wants a new push to encourage the government to create the kind of tax incentives for music companies that it has launched for film, TV and games firms, and grants and regional funds around the country.”
“And there should be the support for the independent labels and independent artists to export their music at a much higher level than currently exists through the MEGS scheme. The MEGS scheme is fantastic, but there is not nearly enough investment going into it to produce the scale of return that we need.”
“I think there is an agenda here for the future: for the BPI, for UK Music, for the whole of the music industry, which is all about positive growth of the sector as a whole. And we need to get on with it.”
Taylor has concerns about British government policy on another front too: a consultation that hinted at potential plans to provide a copyright exception for text and data mining by companies using AI technologies. The BPI has already protested against any such plans alongside its fellow UK industry bodies.
“It’s a serious threat, and a major problem that the government would even advance such a policy,” Taylor told us.
“It is our very strong view that if someone wants to use an AI, to train their AI using recorded music, then they should require a licence to do that. If someone wants to use, let’s say all the Adele recordings, or all the chart hits since the 1970s – to analyse that data set and to produce something using that data – then they should absolutely require permission to do that. And that should be a licensable act,” he later continued.
“The government has proposed, as I mentioned a minute ago, that it may introduce a new exception for text and data mining, which could cover all uses including commercial uses, that would essentially mean that anyone can train their AI on any music that’s ever been made, without seeking permission from anybody involved in the creation of that music.”
“That is wrong in so many ways. Firstly, it’s morally wrong to allow someone to take something of genius that was created by a third party and use it without paying for it. But secondly we think it’s very bad policy.”
The BPI’s argument is if there is no such copyright exception, music rightsholders and technology companies will figure out licensing models to make this kind of work possible – while ensuring that they and musicians get paid.
Taylor has long taken an interest in the impact AI technologies could have on the music industry, including positive uses. He stressed that “the industry cannot fall into the trap of: new technology, we’re scared, we must oppose it in every form”, pointing to the ways artists are already using AI techs to make their own music.
However, he also thinks there needs to be a watching brief on the implications of creative AIs that can make music at huge scale.
“Of course, using these tools to create new music could be creative. On the other hand, what will it do for the incentives of human creators?” he said.
“If you are already competing against 70 million tracks on Spotify, and if hundreds of millions or billions more are artificially created by an AI, and all human creators then have to compete with those, and playlists are stuffed full of them and people don’t even realise? Is that a good outcome for human creativity?”
“We need to make sure the incentives are still there for people to spend their time creating art.”
Taylor said he is also keen to see labels continue their work developing new licensing models in areas like the metaverse, citing the work done earlier this year to create a Brit Awards-themed world on Roblox, including licensing a performance by artist PinkPantheress.
“At the moment, it’s not that scalable. One has to set up each project individually. What we have to do is to develop a kind of licensing ecosystem for these new uses that allows uses to be licensed, tracked, royalties to be reported, piracy to be discovered and rooted out, at scale,” he said.
“We need to be putting a lot more attention into that because it’s hard to keep up with tech developments. There are always new services coming along.”
Talking of awards, Taylor thinks that his successor at the BPI will have an opportunity to expand beyond the current Brit Awards and Mercury Prize. For example, he’d love to see the Classic Brit Awards return, with the 2020 edition of the biennial event having been cancelled due to Covid-19.
The BPI has already worked with the MOBO Awards and Gramophone Awards as a partner, but Taylor sees more potential still.
“Our ambition at the BPI is to promote all the different genres of British music. So what can we do for folk? What can we do for classical? What can we do for rap, hip-hop? What can we do for all the different areas of British music to ensure that it prospers? I think there’s an opportunity to build on what we’ve done over the last few years and take that to the next level,” he said.
Meanwhile, the BPI will continue its work led by chief operating officer MJ Olaore researching diversity and inclusion, as well as environmental sustainability, within the British music industry.
“We’re looking at gender representation in the industry and seeing if we can better understand why it is that there are fewer female recording artists in the charts, in all award shows etc, than there are males?” said Taylor.
“We think it’s important to understand the drivers of that and look at what we as an industry can do to make sure that more young women will want to be recording artists. So there’s a lot of work going on around the diversity and inclusion of the talent pipeline.”
He also stressed the importance of the “super complex” challenge of making the industry more sustainable in the face of the climate emergency.
“There’s very important work going on, both inclusion and on sustainability. If we want to be a successful industry 50 years into the future, we have to make sure that we do the right things on absolutely vital subjects like that.”