IMPALA calls for the renewal of cooperation in the music industry with the aim of achieving the growth of the music market

Eighteen months on from IMPALA adopting its far-reaching ten-point plan to reform streaming, the European association of independent music companies calls for renewed collaboration across the whole music sector to grow revenues, address fairness across the digital market, and develop a clear strategy on risk-taking. IMPALA also calls on governments to introduce new investment measures across Europe.

IMPALA’s latest board meeting, which took place in Hamburg during the Reeperbahn festival, was the opportunity for the association to review its digital strategy.

The first priority remains growing digital income. Recent reports show that the recorded music market has not yet returned to pre-digital levels and that the value of music is decreasing due to inflation and declining subscription prices in real terms. The value of music needs to be reappraised if we are serious about growing the whole ecosystem. This was the basis of IMPALA’s plan to reform streaming.

IMPALA also renewed its commitment to closing the value gap across Europe. The association calls on EU countries which have not yet implemented the EU copyright directive to waste no more time. Non-EU countries are invited to follow the EU’s lead to ensure a strong protection of copyright.

In terms of fairness, IMPALA repeated its call for all labels to pay fair contemporary digital royalties, again one of the fundamental pillars of its streaming plan. IMPALA warns against moves to turn streaming into a zero-sum game, reallocating slices of an ever-shrinking pie rather than cultivating a healthy and blooming garden nurtured by investment, expertise and informed risk. In this regard, the IMPALA board confirmed its opposition to so-called “equitable remuneration” rights via collecting societies. That would hurt labels’ investment capacity, damage the high growth sector of self-releasing artists, leave creators’ incomes at risk from erratic voting rights and distribution laws within some societies. This in turn would have a negative impact on diversity, something which will also be raised in IMPALA’s upcoming report on its equity, diversity and inclusion work. The risk with this approach would be an “investment gap”, as revenues would flow away from the recording side of the business, including of course from self-releasing artists. Streaming is core business, it is not radio.

IMPALA also calls on the industry and governments to focus on growing the “investment stream”. We have heard a lot about the digital pie but less about the investment stream, the term IMPALA uses for the financial resources and knowhow which labels make available for nurturing new talent and projects. Pointing to France as the best in class, IMPALA calls for every country to put in place a system of tax credits, favourable loan guarantees and other fiscal tools to boost investment in the recording sector and have a strategic approach in place for growth.

IMPALA’s Executive Chair Helen Smith commented: “We have to work together to grow the digital market and make sure all can benefit. It’s our responsibility. After weathering through a 2+ year pandemic, the whole sector is now facing a cost-of-living crisis.”

IMPALA’s Helen Smith continued: “We also need governments to play their part. We ask member states who still have to implement the copyright directive to do it swiftly and stick to the text to ensure maximum harmonisation. We also call on the industry and decision makers to look at the investment stream and develop a key strategy that seeks to grow risk-taking in the European music sector”.

Since IMPALA adopted its streaming plan, there have been renewed requests from artist groups, collecting societies and publisher groups to rethink the allocation of digital revenues. This includes demands for a radio type of remuneration, where performers and artists would go through their local collecting society for at least part of their streaming income (so called “equitable remuneration”). This is not backed by any figures about investment or risk and was rightly rejected in the last EU copyright review.

IMPALA spoke out against this over the summer because we believe it cuts across our members risk-taking, as explained above. Pointing to industry negotiations like those in France as opposed to blanket imposition of new rights like in Belgium, IMPALA notes it is time for difficult conversations where the independent sector stands up and calls out so called “equitable remuneration” for simply not being equitable. IMPALA members are active across the whole music sector, from self-releasing artists to labels to businesses also covering publishing and distribution.

IMPALA President and Co-Chair of IMPALA’s Streaming Reform Group Mark Kitcatt, explains: “We see our job as being there to create the space around our artists for them to maximise their income, so they can realise without unnatural limits their creative dreams, and to ensure that long and healthy career paths are apparent to them. We are clear in our streaming plan that labels must step up to the mark and pay a digital royalty to all artists in line with current best practice for new signings, and we ask established services to listen to new ideas for artists to reach their fans and sell up to them. We need those services to be incentivised to offer more opportunities to fans to connect with, and invest in, their favourite artists. Streaming services which improve and diversify their offering to high value fans and boost local markets, rather than compete for free customers, will take the lead.”

Paul Pacifico, AIM CEO and Co-Chair of IMPALA’s Streaming Reform Group stated: “Recent government-funded studies in the UK found that artists with labels have better outcomes, in both absolute and relative terms. This kind of investment matters. Advances and royalties mean artists can be properly supported, especially in streaming. There are many different deal types available and many artists want labels for their investment, security, expertise, visibility, brand and negotiating power without losing money unnecessarily in admin fees to collecting societies. There is also a vast part of the market that is-self releasing – the biggest in terms of numbers and fastest growing.”

IMPALA’s Helen Smith concluded: “Equitable remuneration would damage both models and impose a single solution in a business which has already diversified, giving cultural entrepreneurs more options than ever before. Lead investors in the creative process should be a key focus of all remuneration discussions. Equal is not always fair, especially if we want to avoid an investment gap.”