Streaming reform revisited – IMPALA calls for increased subscription prices, bespoke deals for fans, and a higher share for master rights, among other proposals for a fairer, more dynamic market

27 April 2023 - Press release

Following a month-long review process launched on the two-year anniversary of IMPALA’s ten-point streaming plan, the independent sector has issued a new call to action. Building on IMPALA’s initial recommendations to make streaming fairer and provide a dynamic, compelling, and responsible future for creators and fans, IMPALA’s new call is based on three key themes:
 Getting more money into the market and making sure there is no dilution of revenues
 Changing how revenue is shared
 Boosting diversity, transparency and climate action

In the two years since IMPALA published its plan, streaming has continued to be the centre of insistent calls for reform. Many of the recent proposals from different parts of the market echo IMPALA’s original analysis.

What is also clear is that labels find themselves ever more central to the digital market and more crucial to artists who wish to have their voices heard. Despite this, the most expansive recent market assessments show that the revenue share of master rights in their core business has been steadily eroded. Independents owe it to their artists to meet this challenge, head on.

Despite an increase in revenues, the European recorded market is still far from where it should be – around 42% of turn of the century levels, when adjusted for inflation. The absence of any substantial change on subscription prices in 15 years is striking. 100,000 tracks are uploaded to platforms every single day. Revenues for artists and labels are diluted by this unnavigable input, along with factors such as streaming manipulation, non-music content and AI driven music. IMPALA also flags safe harbour and other value gaps as an issue, as well as the need to maximise revenues from “moment economy” businesses driven by very short music clips.

IMPALA’s proposals lead with an amplified call to grow the overall market, including through increasing subscription prices, stepping up conversion from freemium, and addressing dilution. Mark Kitcatt, Co-owner and MD of Everlasting Popstock, IMPALA’s President and Chair of IMPALA’s streaming working group, commented: “We need to increase the economic value of music as a priority, and reset the conditions in terms of allocation models. That is how we can grow a fair and diverse market. Start with adjusting the basic offer to reflect the pressures of inflation, and then move on up. No two music fans share the exact same passions and needs - the possibilities of tailored subscriptions are endless. But concentration in the streaming market means that the efforts of the small number of multinational companies who dominate that market are limited to making the same model, ever cheaper. Fans and artists deserve much more.”

Since IMPALA’s first plan was published, the question of how remuneration is shared has become central to the streaming debate. With market studies showing an overall decline in the share for labels, IMPALA’s plan includes a clear call to see this increased. This is alongside repeated calls on labels to pay a modern contemporary digital royalty rate, while opposing calls for so-called equitable remuneration. IMPALA’s recommendations also emphasise the need to apply new models to how revenue is allocated. This includes the AIM artist growth model, as well as proposals based on how active fans are and opportunities to maximise revenue depending on fan participation.

Mark Kitcatt continued “IMPALA represents 6,000 competing record labels. That competition for artists, and the emergence of other models in the independent community offering creators myriad routes into the market, work alongside our initiatives like the Fair Digital Deal to define a fair, modern royalty package. All artists should receive a fair contemporary digital rate, regardless of the decade in which they signed their record deal. It’s simply unarguable and is crucial as regular crises force us to reduce our reliance on touring. Services must also play their part, we cannot support initiatives that decrease royalties, whether for preferential algorithmic treatment or any other reason.”

IMPALA’s Executive Chair Helen Smith commented: “When it comes to so-called equitable remuneration, we continued our research and our view on this has not changed: it would deplete value from the market and undermine diversity, equity and inclusion in the music community. Instead, we believe industry-wide agreements exemplified in France are the way forward. We also address the discussion about shares between different parts of the sector and believe that we need to respond to a gradual erosion of the share going to labels. Our recommendation is that this needs to be increased to facilitate investment and risk. Not only that, but we also believe that the independent sector’s disproportionate investment in new talent needs to be recognised. No independent label should receive lower rates, and our recommendations would help increase their revenue.”

The third part of the plan sets out proposals designed to boost diversity and transparency, as well as enhance climate engagement, all of which are flagged as opportunities in IMPALA’s proposals. In its conclusions, IMPALA calls for new metrics and targets. “In another two years’ time, we hope to be celebrating a much bigger streaming industry that’s fairer for all and sets standards for delivering art in all its thrilling diversity to an engaged, informed worldwide audience choosing from tailored services for every taste and need” concludes IMPALA in It’s Time to Challenge the Flow #2, Revisiting how to make the most of streaming,    April 2023.