February 8, 2024
On 31 January 2024, the UK Intellectual Property Office (“IPO”) published the “UK Voluntary Code of Good Practice on Transparency in Music Streaming” designed to improve transparency around licensing and royalties related to music streaming. The Code has been signed on behalf of the members of 12 music industry bodies representing music creators, record labels, publishers, digital service providers (“DSPs”), distributors and collecting societies.
The Code includes commitments to ensure that the terms of contracts entered into with music makers (UK-signed artists, musicians, songwriters, composers, studio producers, etc.) are clear, and that music makers are encouraged to seek independent legal advice. It also imposes obligations on “reporting parties” (labels, publishers, distributors, collecting societies and/or DSPs with royalty accounting and reporting obligations) to provide timely, accurate and clear royalty accounting information. In particular, DSPs should provide to all relevant rightsholders with whom they have contracted accurate and timely usage data and such other information as is necessary to calculate or verify the calculation of royalties due, on no less than a quarterly basis. Reporting parties should in turn pass on this information to recipient parties (music makers, labels, publishers, distributors, collecting societies that have a right to receive accounting and reporting) broken down, where practical, by work, service, territory, the specific DSP and the total number of units appropriate to the DSP model (e.g. streams, views, etc.) to which the income relates.
To provide transparency around new business models, all DSPs must, without revealing commercially sensitive or confidential information or breaching competition law, share details of how their service operates and their different consumer offerings. The Code states that, while reporting parties cannot reveal the existence or level of fixed fees, advances, minimum guarantees or equity stakes received by labels where this would breach confidentiality or competition law, all reporting parties should provide their recipient parties with a clear policy on the distribution of fixed fees, breakage (amounts that are not recouped when an advance has been paid), the proceeds of audits of DSPs, the sale of equity stakes and how such revenues are reported to and shared with recipient parties.
The Code has a 6-month implementation period (to come into effect on an agreed date) and will be formally reviewed in two years. It will be overseen by the IPO who will convene meetings of signatories every six months. Failure to abide by the Code does not constitute a breach of the law or any relevant contract.
As previously reported by Wiggin, there has been a separate IPO workstream on music streaming metadata, including a Call for Views from the IPO in November 2023, the outcome of which is awaited.
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