LexisNexis

The Day the Music Stopped

Friday 13 August 2021

Tessa Robinson
Gleeson McGrath Baldwin, Dublin
trobinson@gmgb.ie

Eileen O’Gorman
Gleeson McGrath Baldwin, Dublin
eogorman@gmgb.ie

Sixteen months since the first Covid-19 lockdowns and restrictions came into place, the majority of the live music industry is still stalled across the world. The pandemic has had an enormous and direct impact on musicians, their way of life and livelihood, and with the European Directive 2019/790: Copyright and Related Rights in the Digital Single Market having reached its final date for implementation, many creators who depend on the development of copyright protections (such as are envisaged by the Directive) have seen a significant portion of their already unstable income obliterated.

Just as the dawning of the digital age of music downloading and streaming sent the recorded music industry reeling in its attempts to bolster falling sales of physical product and a rise in music piracy, the Covid-19 pandemic has had a similar, if not greater, impact. The success of digital services could potentially save the industry, but only if profits are shared proportionately with creators.

Income streams for performing/recording artists today come from the following sources:

  • writing songs and music (composing/publishing);
  • recording music and the exploitation of those recordings (recording/physical sales/streaming); and
  • live performances/touring.

While artists and musicians traditionally reap the benefits of large festivals internationally during the summer months, many countries, including Ireland, are facing a second cancelled festival season.

Recording and writing can still occur in lockdown, but creative output is hampered by restrictions on writing groups, recording studios and gatherings. The live music industry, which is key to funding these creative endeavours and providing income for musicians, has suffered (and continues to suffer) a catastrophic blow. While many are aware of the income stream from touring, live performances, ticket sales and merchandise, the public performance of music at live events and as background music in bars, venues and businesses (many of which have also remained closed) also make up an extremely important income for an artist, by way of public performance royalties. Of course, the live industry is crucial not only to artists but also to promoters, engineers, security, catering, merchandising, and so on: an entire cohort of individuals that make up a multibillion-euro industry worldwide.

The Irish Music Rights Organisation (IMRO) is the Irish collective management organisation (CMO) that administers the performing rights in copyright music on behalf of its members. In 2017, the IMRO undertook a report on the value of music to Ireland.[1] It found that the music industry contributed in excess of €703m to the Irish economy and created more than 13,131 jobs. In the subsequent three years the industry continued to grow incrementally. However, the report also highlighted that the sustainability of the music industry was threatened by technology due to the low level of return to creators of music from platforms exploiting their works in the digital market.

Then, in 2020, the International Confederation of Authors and Composers (CISAC) undertook a report to assess the impact of Covid-19 on the music industry. The report outlines a growth in collective management and royalty collections across the globe in 2019 upwards of 7.8 per cent (more than €10bn). However, in 2020 ‘early forecasts indicate that total collections will fall between 20 and 35 per cent’.[2] This amounts to massive losses of up to €3.5bn in royalties. The report further states that while ‘most societies predict falls of between ten and 40 per cent in 2020 current information suggests an overall global decline in royalty collections in the range of 20 to 35 per cent’.

But what about all those people sitting at home, streaming music and attending virtual events? The report showed a rise in digital revenue in 2019. Part of the reason behind this was a strengthening of licensing agreements with digital platforms. Such revenues remained resilient in 2020 and benefitted from a growth of 187 per cent over the last five years. But while subscriptions to streaming services are on the increase, remuneration for authors of works exploited by streaming services remains low and out of kilter with the revenues these services create.

Each time an artist’s music is played to the public, at a festival, theatre, shop, bar or restaurant, a royalty is paid to the collection societies which is then passed on to the work’s creator. With a total shut down of these premises and a global suspension of the live music and festival circuit, this income all but dried up. What is referred to in the CISAC report as the live and background sector is one the largest income sources for any creator. A decline of 60–80 per cent of that revenue in 2020 is expected.

It will take time to return to pre-Covid levels, where an artist can rely on this seasonal income to bolster their earnings. There are many stumbling blocks on the road to the return of the live and background music sector. Several concert venues may not survive what could end up being an 18-month shutdown. Outdoor events, concerts and festivals that were rescheduled from 2020 to 2021 have now been rescheduled again to 2022 and this will no doubt have a domino effect on the income lost over two seasons, a stagnation in ticket prices (as tickets purchased in 2019/20 remain valid) and a loss of this valuable income stream for yet another year. The public perception of safety will also be a potential barrier to a full return. On top of that, with the collapse of the travel sector, touring costs will rise and the additional costs of travel with regard to testing, vaccination, etc will no doubt have an impact. A continuation of social distancing, testing and other safety measures, as seen in Barcelona and the Netherlands, will add to costs and logistical complexities.

Where does all this leave the artist? There is no doubt that music streaming services gained a massive boost during lockdown and will continue to do so. Where standard licences and tariffs were generally agreed and in place for these services, with the depletion of other income streams and the rise in popularity of digital (and, ultimately, profits) governments need to find a way to bridge the pay gap and assist CMOs to re-negotiate tariffs and royalties so that the creators – who are key to all of these services – receive a fair slice of the pie.

With live events no longer possible, venues closed and gatherings banned, our restricted artists and promoters turned to online streaming. This gave rise to a new form of licensing opportunity also worth investigating. Where a band or musician plays to a live audience, the venue would pay a tariff to the CMO, which would then be paid to the artists for the public performance of their copyright-protected works. This would be based for the most part on the capacity and ticket price – ultimately a percentage of box office. In addition to the traditional tariffs based on capacity being no longer relevant, if copyright-protected music is being streamed live, then a different bundle of rights are being exploited in making the event available, albeit digitally, to the public. The owner of the relevant copyrights must be compensated for the exploitation of these rights.

While many venues are aware of the potential infringement of copyright when they do not have a licence for the public performance of copyright-protected works, they are not fully aware of the need to licence online performances. They and the platforms that make the works available need to be educated and a new licensing regime put in place so that this income can be maximised for creators. In relation to digital events, a whole new bundle of rights are being exploited, including the making available right, and there is also need for a mechanical licence and, in some circumstances, a synchronisation licence (where the music is synchronised with pictures).

The experience in Ireland over lockdown has been an interesting one. For the most part, live-streamed events were initially free of charge. With the extension of various lockdowns and no live events taking place, ticketed streamed events began to appear, which was also helped by various live performance grants from central government. However, the take up on paid-for streaming events was small compared to those streamed for free. Most events were streamed on popular platforms such as YouTube, Facebook and Instagram. The parties benefited from what is in effect a blanket licence for the use of copyright music, meaning no additional tariff was required or payment made to the artist.

We may see the rise of a hybrid-type event in future, with a partly live and partly digital audience. In these circumstances, the bundle of rights exploited must be licensed in order to avoid copyright breach. So that this can be done effectively, the IMRO has entered into stakeholder discussions on a fair tariff for the use of copyright content at hybrid or digital events. Like live events, where the tariff is based on a percentage of the box office, it is proposed that any new digital tariff would also be based on a box office percentage. The CMO, however, is cognisant of balancing the rights to receive a fair licence fee for the use of copyright protected music for the benefit of their members with not placing a disproportionate financial burden on struggling venues. Surely, then, the focus should also be on reviewing the tariffs paid by digital services and platforms that are making the events available?

In summary, in a changing world we need to remind people of the basics of copyright, the various bundles of rights owned by the creator of a copyright work, and which of these rights are being exploited in the digital space. Above all, we need to encourage and foster fair and equitable remuneration for the creator. Where traditional incomes can disappear overnight and be held hostage to the vagaries of the human immune system, newer forms of exploitation of copyright need to be embraced and used to bolster the income streams of artists.

While many streaming services and other sectors, including the recorded music sectors, CMOs and governments, worked on making stimulus funds available for musicians, this emergency action needs to be further developed and incorporated into normal parlance to create a robust protection and share of the income in the digital (and any other emerging) markets for artists.

 

Notes

[1] IMRO and Deloitte, ‘The socio-economic value of Music to Ireland 2017’ www.imro.ie/wp-content/uploads/2017/11/Imro-Report-2017_12.10-final.pdf accessed 20 July 2021.

[2] CISAC, ‘Covid-19: Crisis, Resilience, Recovery’ Global Collections Report 2020, available in English, French and Spanish www.cisac.org/Newsroom/global-collections/global-collections-report-2020 accessed 20 July 2021. ​​​​​​​