Rewarding creativity - fixing the value gap

The music industry has transformed itself into a predominantly digital, growing industry. To achieve this, record companies have worked tirelessly to adapt, innovate, and invest, to drive a new digital age for music. However, for this positive development to be sustainable, there must be a fair digital marketplace where all the participants play by the same fair rules.

The sustainable and balanced growth of the digital content market continues to be undermined by a fundamental flaw in legislation underpinning the market that has created a ‘value gap’, a mismatch between the value that online user upload services, such as YouTube, extract from music and the revenue returned to the music community.

It is currently the biggest policy challenge facing the music industry. For music to thrive in a digital world, those that are creating and investing in music must be able to negotiate fair commercial terms for its use. Furthermore, digital music services that are licensing music on freely negotiated terms, must be allowed to compete on a level playing field – something they currently do not have.

The global music community is united in its call to fix the value gap and is campaigning around the world for a legislative solution.

Breaking down the value gap

what is the value gap?

The value gap describes the growing mismatch between the value that some digital platforms, in particular online user upload services, such as YouTube, extract from music and the revenue returned to the music community – those who are creating and investing in music.

How has it come about?

Inconsistent applications of online liability laws have emboldened certain digital platforms to claim that they are not liable for the music they make available to the public. Today, services such as YouTube, which have developed into sophisticated on-demand music platforms, use this as a shield to avoid licensing music like other digital services do, claiming they are not legally responsible for the music they distribute on their site.

Why is it a problem?

Artists and all music creators must be fairly compensated for their work. The music ecosystem is dependent on record companies investing in music and in artists. Music must be valued fairly and those that create and invest in it must be properly remunerated. If digital platforms which do not recognise the true value of music are allowed to attract users from other, fairly licensed, digital services, therefore draining revenues from the creative ecosystem, then it becomes unsustainable. The situation also creates unfair competition. Services such as Spotify, Amazon Music Unlimited, Deezer and Apple Music are forced to compete with music platforms that do not play by the same rules and that claim they are not liable for the music they distribute.

how can it be fixed?

Legislative action is needed to ensure that laws on copyright liability are applied correctly and consistently, so that online user upload content services making music available must negotiate licences to do so, instead of free riding on the back of so called ‘safe harbour’ liability privileges. The music community is united in calling for policymakers to take action.