The Intellectual Property Office (IPO) has today (January 31) published the UK Code of Good Practice on Transparency in Music Streaming.
The voluntary code has been developed and agreed by 12 music industry bodies representing music creators, record labels, publishers, digital service providers, distributors and collecting societies. Trade bodies and organisations who have signed up include the BPI, AIM, ERA, PPL and PRS For Music,
“The code is a pledge from the music industry to a race to the top on transparency and is the first such commitment of its kind in the world,” said the IPO in a statement.
The 11-page Code of Good Practice on Transparency in Music Streaming covers areas including contracting with music makers; the supply chain; royalties; audits; licence agreements with DSPs; and music maker communication. It covers both new and existing contracts.
The voluntary code – you can read it here – is a framework for minimum standards for good practice in the trade body members’ dealings with everyone involved in the UK music streaming industry, including UK-signed music creators.
The publication of the code follows the long-running Culture, Media & Sport Committee inquiry into the economics of streaming. Since then, there have been reforms put into place by both labels and platforms, including a move by Spotify aimed at tackling streaming fraud and supporting emerging and professional artists.
While the Competition & Markets Authority did not identify any need for a full investigation of the streaming market, the committee’s inquiry still held sway with the government. The agreement of the new code is part of the commitment made by the government in response to the recommendations of the streaming inquiry.
IPO oversight
The IPO will have oversight of the code and its implementation and will convene meetings of signatory organisations every six months to consider how the code is working, with a formal review in 2026.
During the first two years, signatories will seek to eliminate causes of misunderstandings within the industry, promoting trust via a greater dissemination of information on digital music. After that, signatories will consider how to improve the code by considering additional commitments on transparency.
Any failure to abide by the code would not constitute a breach in legislation or relevant contracts.
“It sets out agreed standards of good practice, forming part of a shared ambition across the music industry to build greater trust in music-maker contracts, streaming licensing deals, royalty payments, usage data, audit rights, and communication to music creators,” added the statement.
It is part of the process to help improve creators’ understanding of how their music is licensed, administered and used, in order to establish “confidence and clarity that they are being paid correctly when their music is played via streaming services”.
This pioneering code, designed by the music industry with government backing, has trust at its core
Viscount Camrose
Viscount Camrose (pictured), Minister for AI and Intellectual Property, said: “From The Beatles and The Rolling Stones to Dua Lipa and Little Mix, the UK music scene is the envy of the world. In the last decade, the way that we consume our music has changed markedly, and that’s why we’re taking steps to help ensure artists get the royalties and protections they deserve when their music is played on streaming platforms.
“This pioneering code, designed by the music industry with government backing, has trust at its core. I’m delighted to see the UK leading the charge to ensure our peerless creative minds get the protections they deserve, as the way we listen to our favourite tracks continues to evolve.”
Lucy Frazer, Culture Secretary, said: “For decades the UK music industry has projected our soft power to the world. Our home-grown artists make awe-inspiring music that brings in billions of pounds to the economy.
“As technology continues to transform the industry, musicians must be entitled to a clear and simple way of understanding what they can expect to be paid from streaming royalties. I welcome the music industry working together on this, and look forward to this code being put into practice.”
Dr Jo Twist OBE, BPI chief executive, said:“This landmark agreement, the first of its kind between the creator and rights-holder communities, articulates what good practice looks like in terms of transparency and communication throughout the digital music supply chain. We are proud to have played our part in this collaborative effort, working with government and industry partners to bring this code to fruition. This success builds meaningfully on the recent progress around metadata and other significant measures addressing creator concerns around music streaming. We look forward to adopting the same evidenced-based approach to contribute positively to ongoing discussions about how we can strengthen the UK’s music sector.”
Label & publisher contracts
The voluntary code states that label and publisher contracts with music creators should state remuneration terms clearly, including, if applicable, that any advances are to be recouped before royalties become payable.
Any contract should contain reasonable detail on how royalties will be calculated including any categories of recoupable costs, as well as the means by which royalty information will be shared (such as via a portal), and the frequency with which it will be shared.
Labels and publishers should provide a statement of accounts and any due royalty payments no less than twice a year.
The code requires that music makers in existing deals with labels and publishers be provided with the same level of information. “To the extent such information is not already set out in the relevant contracts or in royalty statements or has not otherwise already been communicated to the relevant music maker, it should be provided on request,” the code states.
The code requires DSPs to provide all relevant contracted rights-holders with accurate and timely usage data and other information which is necessary to calculate, or verify the calculation, of royalties. Usage reporting should be provided at least on a quarterly basis.
In the event of a disagreement over whether an organisation or person has fallen short of the code, and where no resolution is found through direct contact, relevant trade bodies could act to broker further dialogue and seek to resolve the matter constructively.
The code will come into force on July 31, 2024 and has been agreed by:
Association of Independent Music (AIM)
British Phonographic Industry (BPI)
The Digital Entertainment and Retail Association (ERA)
Featured Artists Coalition (The FAC)
Independent Society of Musicians (ISM)
The Ivors Academy
Music Managers Forum (MMF)
Music Producers Guild (MPG)
Music Publishers Association (MPA)
Musicians’ Union (MU)
Phonographic Performance Limited (PPL)
PRS For Music
The Council of Music Makers, the joint campaigning voice of the Ivors Academy, FAC, MMF, MPG and the Musicians' Union, issued a response to the publication of the Code.
“Although the commitments in the code are modest, it provides a framework that can be used to start tackling the ‘systemic lack of transparency’ in music streaming that was identified by the Culture, Media & Sport Select Committee in 2021,” said the CMM statement.
“Since then, the lack of transparency in streaming has increased, with individual streaming services announcing new business models, such as payment thresholds and spatial audio uplifts, developed without consultation with music-makers or their representatives, making it even harder to understand how they are paying through.
“We now need everyone working in the industry to fully embrace the code, and to go above and beyond in providing music-makers with the information they need to properly manage, understand and audit the digital side of their individual music-maker businesses.”
The CMM said it will play an active role in monitoring ongoing transparency issues, working with the Intellectual Property Office.
“When the code comes into force in six months’ time we will be launching a complaints mechanism via which music makers and their managers will be able report non-compliance of the code and other transparency issues,” said the Council of Music Makers. “We will then take up these issues with other music industry trade organisations and the IPO on behalf of our members.
“We will also continue to call for more proactive communications from everyone in the digital music supply chain, and for much stronger commitments around licensing models, royalty chains and audits. And we will celebrate and champion best practice where we see it.”
“I was closely involved with the process that led to the development of the UK Contract Transparency Code in my former role, and I am pleased to see its release today,” said Graham Davies, president and CEO of DiMA and former Ivors Academy CEO. “The code is a great example of the music industry coming together for progressive reform. I look forward to continued collaboration in my current role, as I believe the music industry works best when we work together to improve the system for all stakeholders.”
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