MP says record boss ‘in cloud cuckoo land’ over music streaming claims | Music streaming | The Guardian

The boss of a major record label has been described as “living in cloud cuckoo land” after he claimed artists were happy with the music streaming model.

The heads of three major labels – Universal, Sony Music and Warner Music Group – gave evidence before the digital, culture, media and sport (DCMS) committee inquiry into the economics of music streaming, in often testy exchanges about whether the model was fair.

Universal Music UK’s chairman and chief executive, David Joseph, told the inquiry that artists were “very happy with the investment, very happy with advances” they currently received, before the SNP MP John Nicolson interrupted, saying: “I think you’re living in cloud cuckoo land here if you really believe that.”

Joseph also refused to answer a question about whether the lower royalty fees his label agreed with Spotify as part of a multi-year deal in 2017 had affected artists.

After he claimed he couldn’t answer the question because it would reveal information that could give his competitors an advantage, the committee chair, Julian Knight, intervened and directed him to answer. After being pushed, he said that the label had “increased the amount” it paid to artists as a result of streaming deals.

Jason Iley, the chairman and chief executive of Sony Music UK, and Tony Harlow, the chairman and chief executive of Warner Music UK, also gave evidence, with Iley saying 80% of his company’s revenue currently comes from streaming and that £190m has been spent on talent scouting and the artistic development of recording artists, known as A&R.

The label bosses appeared in front of the inquiry after earlier sessions in which MPs had heard from musicians who painted a bleak picture of the streaming industry at present. Established artists told the inquiry they were struggling to make money now that touring revenues had stopped due to the pandemic.

The Conservative MP Steve Brine discussed the evidence given by Nadine Shah at an earlier session in which she said that despite being a successful, critically respected artist, she was finding it difficult to make ends meet.

Nadine Shah at the Roundhouse in London in March shortly before the first Covid lockdown

He said: “We can dance around these issues as many times as we want but the bottom line is successful artists can’t afford to pay their rent. There’s something going wrong, surely.”

Joseph responded by saying some artists who relied on the live circuit had been hit hard by the pandemic but that it was “not logical” that lost revenue would be instantly replaced by streaming. “That was never how their earnings were shaped,” he added.

The three record bosses claimed that they were huge investors in British musical talent via their A&R spend, while arguing that more regulation of the streaming industry would be counterproductive.

Harlow said streaming was “an evolving situation” that was being well governed, adding that any change or disruption could “diminish UK competitiveness”.

Before the session, the BPI, which represents the three major labels, released data it claimed showed that of the money labels received from Spotify subscriptions, the vast majority was put back into the industry via A&R.

Nicolson questioned that argument and claimed that Warner Music had given out more to passive investors than had been spent on artist development. Harlow said that was inaccurate and that in 2020 the company had spent $1.15bn (£840m) on A&R globally, with dividends totalling $280m.

The inquiry continues and will hear from streaming services, such as Spotify. The aim of the hearings is to establish whether the streaming models are “fair to the writers and performers who provide the material”.