WHY ‘EQUITABLE REMUNERATION’ IS NOT EQUITABLE: WIN REACTS TO THE NEW URUGUAY LAW
Madrid, 29 November, 2023
This month, a new right to ‘Equitable Remuneration’ for performers on streaming was introduced in the Ley de Rendición de Cuentas y Balance de Ejecución Presupuestal (Accountability and Budget Execution Law) passed by the Uruguayan Parliament. Independent record labels and self-releasing artists are deeply concerned about the consequences of such a model for the economy of the local indie sector.
The law introduces an additional Making Available right for performers applicable to the internet and digital networks, to be managed by Collective Management Organizations. This will be adding a layer of red tape on top of the current commercially negotiated licensing system.
There was no stakeholder consultation, no impact assessment, no industry negotiations. WIN and the Uruguayan record label community spoke out about the unintended consequences of introducing this new right. Unfortunately, our concerns were not heard.
Streaming Is Not Radio!
Streaming has become a crucial source of income for the Uruguayan independent sector. This stream of revenues grew from 19.4% of the recorded music market in 2019 to more than 50% today, an incredible growth trend that will be halted by the introduction of this new right.
The remuneration of featured artists on the internet is already effectively exercised through their Making Available right under commercially licensed terms. They are paid either via royalties from the record labels or directly from the digital platforms in the case of self-releasing artists. As for session musicians, they are paid a lump sum up front.
‘Equitable remuneration’ is not ‘fair payment’ in the sense that is commonly understood. It is a legal mechanism that allows for compensation to be paid to rightsholders whose work is used commercially where they have no rights to say ‘no’ or to negotiate a payment, such as broadcasting or public performance.
We are ardent advocates of collective management in these areas where it would not be possible to negotiate individually. But this is not suitable for streaming, where artists and labels are already implementing direct deals (for instance, through licensing bodies like Merlin). Streaming is not radio! It is core business where rightsholders should be able to say yes (or no) and negotiate commercial terms.
More Players, More Costs, More Red Tape
In practice, the introduction of the additional right to ‘Equitable Remuneration’ for streaming means adding new players in the ecosystem. This complicates administrative management by the digital platforms and increases their costs. Furthermore, the rates paid under ‘Equitable Remuneration’ are generally lower compared to commercial ones.
This additional right can be seen as a double payment since streaming platforms already pay artists. There is no precedent of this in Latin America. In Sweden, one of the only countries where this question was the subject of an official inquiry, the conclusion was that applying ‘Equitable Remuneration’ to digital revenues is simply not compatible with copyright.
Last week, Spotify announced that it will cease service in Uruguay by February 2024. Among the reasons given are the lack of clarity on whether the additional payment should be deducted from what is paid to rightsholders or if it will be borne by the streaming platforms.
A Disastrous Effect for Diversity and Smaller Players
The ‘Equitable Remuneration’ right harms other stakeholders in ways that affect medium and long-term investment in new music. Independent record labels account for 80% of new music releases, and anything that reduces their capital for investment in new artists and projects has a huge impact.
The effects will be disastrous for small record labels and particularly for self-releasing artists. Instead of every peso generated on streaming platforms going directly into their pockets, they will have to wait for slower distributions from the Collective Management Organizations with a substantial administrative fee. And this is for those artists who are members, which is not the case for many emerging acts in Uruguay.
The Worldwide Independent Network connects, supports and develops independent music trade associations throughout Australasia, Asia, Europe, North and South America. WIN acts as a global coordination and support body for the independent sector, focusing on its long-term development and sustainability. Our goal is to foster a diverse and vibrant ecosystem where all independent labels have equal access and opportunities. WIN is also a focal point for collecting and sharing knowledge about the independent sector and wider music industry at national and international level.
IMPALA was established in 2000 and now represents nearly 6000 independent music companies. 99% of Europe’s music companies are small, micro and medium businesses and self-releasing artists. Known as the independents, they are world leaders in terms of innovation and discovering new music and artists – they produce more than 80% of all new releases and account for 80% of the sector’s jobs. IMPALA’s mission is to grow the independent music sector sustainably, return more value to artists, promote diversity and entrepreneurship, improve political access, inspire change, and increase access to finance. IMPALA works on a range of key issues for its members, runs various award schemes and has a programme aimed at businesses who want to develop a strategic relationship with the independent sector – Friends of IMPALA.
IMPALA – Independent Music Companies Association
Rue des Deux Eglises 37-39, 1000, Brussels, BELGIUM
+32 2 503 31 38