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Research Article

License to stream? A study of how rights-holders have responded to music streaming services in Norway

Pages 61-73 | Received 11 Jan 2021, Accepted 22 Mar 2021, Published online: 13 Apr 2021

ABSTRACT

This article rewinds a decade to reconstruct the arrival of streaming services and their impact on the music industry. It focuses on copyright holders and their experience with reaching out and getting paid via streaming, charting developments in the relationship between licensor and licensee such as the rise of direct licensing. The study is based on interviews with labels, publishers, collecting societies and interest organisations for composers and performers in Norway, where streaming caught on early. It finds that streaming services, with Spotify out in front, have led majors and indies to wage a war over rights and global market shares, while the ability of collecting societies to hang on to their bargaining cards now depends on the way in which on-demand access to music is legally defined. This article also concludes that, so far, these struggles have been easier on the composers than on the performers of music.

Introduction

Over the last decade, streaming services such as Spotify, Deezer and Apple Music have been able to grow immensely. The rise of on-demand music consumption has been accompanied by falling record sales and weakened radio listening. When century-old music media are being challenged, the question arises as to how their successor media connect artists with listeners and markets. In this article, I am interested in the role of copyright in the development of streaming services as intermediaries in this exchange between artists and markets. I ask, more specifically, to what extent have rights-holders been able to exercise their rights and thereby sustain their economic interests in their interactions with these new services?

A key objective of copyright is to ‘give rights to the creators, performers and investors of creative work’ and thereby ‘give incentives to cultural production’, as stated in the recently revised Norwegian Copyright (paragraph 1).Footnote1 It also aims, however, ‘to maintain a fair balance between the interests of the rights-holders, on the one hand, and the interests of the users and the public, on the other’ (ibid.). While copyright is the legal basis for licensing agreements between rights-holders and streaming services, it can also provide a framework for considering more broadly how different parties interact and how reasonable their actions are.

The first part of this article establishes the framework of copyright and how it regulates the relationship between rights-holders and new music media. The article goes on to present an investigation into the ways in which record labels, publishers, collecting societies and interest organisations in Norway have dealt with streaming services. Norway, like the other Nordic countries, had an early encounter with large-scale streaming, and this study unpacks the responses of key parties in this encounter by drawing upon interviews with staff members. Towards the end, the article discusses the extent to which different groups, particularly performers, have been able to sustain their interests in the streaming era and evaluates the ability of current copyright law to protect contemporary creative work.

Copyright and new music media

The starting point of this study is copyright law in Norway, which is closely attuned to international copyright through Norway’s participation in international conventions and EU regulations (see Proposition Citation2017). As expressed in paragraph 1 above, copyright law gives rights to creators and performers, but also to those who invest in their work. The law therefore enables the transfer (sale) of rights, the primary investors in which have been publishers and record labels (in the case of music). These rights-holders have, in turn, commercially exploited those rights by licensing the music to concert operators, record sellers, radio stations, television channels and, more recently, online media.

The law also sanctions the operations of collecting societies, which negotiate deals and gather remuneration from the various music mediators on behalf of their rights-holder members. In Norway, as in several other countries, there is one collecting society representing creators and publishers (TONO). In the music sector, ‘creator rights’ refer to the rights of composers, songwriters and lyricists, which the present discussion gathers under the blanket term ‘composer rights’. The rights of performers and record labels are represented by another collecting society (GRAMO). The rights of all such member groups have evolved along with the media seeking to communicate their music. The Bern convention (of 1886) from the start offered composers the rights to control the ‘reproduction’ of their work, in the form of sheet sales, as well as its ‘public performance’, in the form of live concerts. In 1908 the convention specified that it also covered ‘recording rights’ – and thus the bourgeoning record sales – and in 1928 it formulated rights in terms of ‘radio communication’ (Burger Citation1988). The Rome convention (of 1961) sought similar rights for performers, record labels and broadcasters (Fleischer Citation2015).

Norway has signed both conventions and is a member of WIPO (the World Intellectual Property Organization), which in the 1990s aimed to address the emergence of web-based distribution and its various forms of filesharing and downloading. In 1996 WIPO agreed on the right of composers and performers to authorise ‘the making available to the public’ of their works ‘in such a way that members of the public may access them from a place and at a time individually chosen by them’ (article 8 in the WCT treaty for authors, including composers; articles 10 and 14 in the WCT treaty for performers). WIPO thereby sought to ‘fill in the gaps’ and ensure that works no longer fell through cracks in the ‘communication rights floorboards’ (Citation2006, 744–746).

The ensuing decades, however, presented a series of challenges to the exercise of the established rights. First, a wave of unauthorised file sharing proved notoriously hard to contain. Then, record sales dropped so much that the launch of legal downloading services such as iTunes (since 2003) could not halt the fall in revenues from recorded music. The new century also saw a decline in linear radio listening, particularly among younger audience segments (Miller Citation2017; SSB Citation2019). It was in this context that a handful of companies began to develop services offering consumers access to vast databases of music in return for advertising exposure or a moderate monthly fee (typically about 10 Euro). These streaming services, with Spotify in the lead, proved immensely popular and contributed to an increase in recorded-music income at the turn of the 2010s (IFPI Citation2019).

For composers and performers, as well as publishers and labels, streaming services have not only generated revenues but also formed a new gateway to the market. Research has shown that being added to Spotify’s popular playlists can trigger millions of streams (Aguiar and Waldfogel Citation2018, 15). According to the company itself, ‘we now program approximately 31 percent of all listening on Spotify’ (Spotify Citation2018, 4). As the leading streaming service, with more than 300 million users, Spotify has also faced criticism for its operations and for its meagre pay-out to many artists (Marshall Citation2015).

Crucial for the turn to streaming, as Wikstrøm (Citation2009) has underscored, was the ability of online music providers to negotiate agreements with the rights-holders. The key term here is license, and the act of licensing takes place between licensor and licensee (Schwemer Citation2019). A license is a permission and formal agreement supported by law, which implies that the licensor must be in control of the rights in question, while the licensee cannot do more with the music than that which the license specifies. There is a lack of research, however, into the ways in which licensor and licensee have engaged in negotiations, and the ways in which the different parties have (inter)acted to shape the current state of streaming. ‘The licensing relation’, argues Schwemer, has been subjected to ‘very little economic or legal research that focuses on an integrated analysis, which gives a complete picture’ (Citation2014, 149). This paper will contribute to that picture.

One visible aspect of the struggles around streaming is represented by the related campaigns of various interest groups, such as the lobbying of composer and publishing organisations in the United States for the Music Modernization Act. In Europe, numerous performer organisations have joined the ‘Fair internet for performers’ movement, which demands a right to ‘fair compensation’ and ‘an unwaivable right to equitable remuneration’ from online distribution (Aguilar Citation2018). Less is known, however, about how rights-holders have worked to make the most of their rights within the current legal framework – that is, how publishers, record labels and collecting societies have exercised their rights in the face of the new music media.

Approaching rights-holders and relationships

A study of rights-holder entities should be sensitive to their formation, which varies among countries (Street, Laing, and Schroff Citation2018). The present study was carried out in Norway, whose population of 5 million includes a growing number of composers and performers. The member figures of TONO grew from 18624 in 2009 to 32590 in 2018. Fewer than 100 TONO members are publishing companies, and many of those involve only one person, indicating the rarity of publishers in Norway (of the major publishers, only Warner Chappell has offices there). The member rates of GRAMO grew even faster, from 11354 in 2007 to 28179 in 2017, and record label representation grew fastest of all in this period, from 16 percent to 24 percent of the overall membership (BI Citation2019). Given that the major labels were already established by this time, this growth is attributable to independent labels – primarily, artists forming their own labels to release their music. Key enabling factors in that process included new technologies for production and distribution, such as the online music services (Kjus Citation2019). Streaming services have generally refused to interact directly with independent artists and labels, however, so they have instead been driven to the growing intermediary level of digital distributors, such as the Orchard.

In other words, the makers of copyright-protected work have limited access to negotiations with streaming services, which are left to the collecting societies, major publishers, major labels and distributors (see ). The interest organisations of composers and performers do not represent legal rights but bring the views of their members to bear on conversations with both industry players and political bodies. Labels and publishers have interest organisations with similar responsibilities. Such organisations are here included among the stakeholders of music licensing outlined in .

Figure 1. Stakeholders of music licensing

Figure 1. Stakeholders of music licensing

The listeners, whether conceived of as individual consumers or larger audiences, are included in the figure because they are directly affected by the encounter between rights-holders and music media, which impacts, for example, how music is brought to their attention and how the work of favoured artists is funded. The medium of the present study is the streaming service, exemplified by Spotify, which was the first (and remains the largest) service in Norway and most other countries. The challenge of gaining access to the operations of streaming services (see Eriksson et al. Citation2019) is here circumvented by a focus upon the rights-holders and their efforts to exert rights and protect interests.

Rights-holder entities in Norway were more likely to be available for research purposes than the multinational streaming services, which had a limited local presence. Furthermore, there was likely to be information, and ways of interpreting it, which was primarily available to the staff of those organisations which interacted with Spotify. I will therefore explore the ways in which interviews with relevant staff members can contribute to a ‘complete picture’ of complex licensing relations (Schwemer Citation2014, 149).

Among the major labels, I turned to Universal and Petter Singsaas, who led its Norwegian branch from 1994 to 2016 (he has since been running a smaller label). Among the publishers, I selected the largest Norwegian publishing company, Arctic Rights Management, and its founder, Kai Robøle. He also leads the interest organisation for publishers in Norway (Musikkforleggerne) and currently represents them on the TONO board. Within the collecting societies, I approached the head of GRAMO, Martin Grøndahl, and the head of the online media department in TONO, Inger Elise Mey. Among the digital distributors, I contacted Erik Brataas, who was in charge of the largest Norwegian distribution partner, Phonofile, from 1999 until its 2017 purchase by the US distributor the Orchard.

I also approached the interest organisations of the major and independent record labels, the former represented by IFPI, led by Marthe Thorsby (who is also a board member of GRAMO), and the latter represented by FONO, led by Larry Bringsjord (who also runs a medium-sized label). Lastly, I turned to the interest organisations for composers and performers, represented by NOPA and GramArt, respectively. I interviewed the head of the board of GramArt, artist Ivar Peersen (who is also on the board of GRAMO), and the deputy leader of NOPA, composer Ole Henrik Antonsen (who is also a deputy in TONO’s working group on allocations).

I conducted interviews with these nine industry professionals over the course of 2019 at their various workplaces. I began by asking how they all perceived the arrival of streaming services in relation to other music media. Follow-up questions probed their respective interactions with such services, particularly in terms of exerting their rights and protecting their interests. The questions encouraged retrospective reflection and the reconstruction of key developments leading up to the present situation.

The analysis which follows begins with the largest rights-holders and shows how they engaged in the establishment of licensing practices which collecting societies and interest organisations have since tried to (re)shape.

Rights, values and volumes

The former head of Universal’s Norwegian branch, Petter Singsaas, associated the early 2000s with a sense of alienation from lawmakers, as well as the company headquarters in New York: ‘Suddenly, the copyright to our music, which is essentially all we’ve got, got muddled, and many politicians seemed to think that music should be free for all’, he recalled. There were intellectual and political movements, such as ‘Pirate Parties’, which sprang from the notion that ‘information wants to be free’. For Singsaas, these movements legitimised the goals of Spotify, the initial proposition of which was precisely to offer music for free (funded by advertising alone). Considering it his job to explore business opportunities in all areas, he seriously assessed the service’s approach to Universal, but he had a hard time explaining Spotify’s model to the company’s US leadership, which he found to be ‘conservative and built around the old system’. For Universal, it was out of the question to license to a service entirely free of charge, and the label demanded the addition of a premium subscription tier, as did its major label peers, Sony, Warner and EMI (the latter ultimately purchased by Universal in 2012). The major labels also demanded minimum rates per stream, prepayments and positions as shareholders in Spotify.

The negotiations surrounding the testing of streaming in the Nordic countries in 2008 included two other key aspects as well. First, the parties agreed on a simple remuneration model, whereby total revenue would be divided by total number of streams to generate a price per stream (the so-called pro-rata model). This did not mean that each stream was valued equally, however, as the minimum rates of the different labels tended to vary. Second, with Universal in the lead, the major labels developed a novel form of centralised licensing with Spotify, through which deals would be made for several territories at the same time, and streaming logs and remuneration were exchanged directly and bilaterally. The major labels thereby effectively circumvented the established collecting societies – a shift supported by the EU in the name of market competition (see Schwemer Citation2019). At the level of allocations to different rights-holders, the streaming model brought with it new complexities, described in this way by Singsaas:

Songwriting comprises a composer and a lyricist, with a publisher representing them. Involved in the recording, you have the performing artist(s), the creative producer and the record company. So, for one track, you easily have six rights-holder entities which might comprise numerous people. If you just look at songwriting today, there might be five rights-holders who are represented by five different publishers. The same can be the case for the recording rights. Rather complicated, right?

As Singsaas pointed out, the calculation of pay-outs to individual rights-holders was to be undertaken for every single stream (soon totalling billions of them), underscoring the fact that licensing was key to Spotify’s business proposition. To complicate things further, the record labels tended to favour short licensing periods, and those rights-holders who realised that others had received better terms constantly sought to renegotiate (this phenomenon was mentioned by several informants).

The major labels witnessed soaring revenues from Spotify’s activity, supported by an ever-increasing number of paying subscribers, and indicated their support of streaming via their interest organisation, IFPI. According to the head of the Norwegian branch of IFPI, Marthe Thorsby, the labels never doubted the legality of streaming, but they did watch closely when the licensing arrangement was questioned. As noted above, scepticism was starting to simmer among artists, and in 2013 their frustrations with low payments triggered the Swedish Musicians’ Organisation to take up the issue of whether Universal and Warner had the right to distribute records via streaming services. In 2014, the Finnish Musicians’ Union represented the sons of the late artist Albert Järvinen in their claim that the contract signed by their father in the 1970s only covered physical phonograms and did not entitle Universal to license his albums to online services. A Finnish court supported the claimants and ordered Universal to remove the albums from those services.Footnote2 In 2015, the Swedish Musicians’ Organisation made the same demand to a record label on behalf of the (living) artist Johan Johansson. The court agreed that his 1981 record deal did not cover digital exploitation, but Johansson complicated the situation by acknowledging his receipt of digital payments since 2006, however meagre he found them, causing the court to conclude that the artist had effectively endorsed the rights he was offered, thereby acquitting the label.Footnote3 For the head of IFPI Norway, this decision indicated that the time of uncertainty regarding the lawfulness of streaming was coming to an end. In turn, my question concerning the kinds of rights which were required to license music to streaming services, such as the rights to reproduction and performance, was considered irrelevant by my informants from the record label sector.

Despite attempts to disrupt the process, then, the major labels and their distributors have long been able to license and transfer tracks directly to Spotify. As the licensing model was developed, including aspects such as minimum rates and pro-rata remuneration, the independent labels were left without much of a say in it. According to Larry Bringsjord, the leader of FONO, the interest organisation for independent record labels in Norway, ‘it has always been a challenge for indies to achieve effective distribution’. For that reason, FONO had established its own distributor, Phonofile, already in 1999. Under the direction of Erik Brataas, Phonofile grew into the largest digital distributor in the Nordic countries and was therefore also approached by Spotify ahead of its launch. Brataas recalled that Spotify presented what was called a standard deal for indie labels – one which did not leave much room for negotiation. Despite some initial scepticism, Phonofile representatives eventually signed a deal that their members could use, and several labels decided to try out Spotify. In hindsight, Brataas regretted that the deal did not cover minimum rates per stream, which was ‘catastrophic, particularly since the users first signed up for the free, ad-funded version, which did not have any real apparatus for advertising sales’. The first rounds of payments were extremely low, leading FONO to officially recommend that its members refuse to license to Spotify.

At the time of Spotify’s approach in 2007, the international organisation for indie labels, Impala, formed Merlin to act as a ‘global digital rights agency for the world’s independent sector’.Footnote4 It also initially signed Spotify’s standard deal, which did not cover minimum rates, but it was later able to renegotiate to include them. Merlin not only represented the largest independent labels, including the Beggars Group, but also ‘a growing number of independent labels which realised that we could negotiate with greater force together’, said Brataas. Phonofile joined at the turn of the 2010s, which triggered a growth period that would earn Merlin the nickname ‘the fourth major’. At the same time, the major labels started to purchase the distributors of independent labels, which were then merged with their own distribution companies – Universal’s Spinnup, Sony’s the Orchard and Warner’s ADA, respectively. ‘This was a strategy to strengthen their negotiation cards vis-à-vis streaming services’, concluded Brataas, ‘as it enabled a major to argue that they represented 30 or even 40 percent of the entire music market’. In order to reinforce their own competitive edge, Phonofile likewise merged with other distributors, the last of which was the German-based Finetunes in 2017. FONO sanctioned that merger to build a stronghold for independent labels in northern Europe, then was dumbfounded when the holding company of Finetunes, SendR, decided to sell it all to the Orchard. Phonofile was absorbed by the Orchard and subsequently included in the licensing deals of the mother company, Sony. There were loud protests in the independent sector, and the head of Merlin, Charles Caldas, publicly objected to the majors and the way ‘their faux-indie imprints are land-grabbing independent rights in order to bolster their market shares and use the value of those indie artists to extract disproportionate value from the market in their negotiations with digital services’.Footnote5 Phonofile left Merlin and brought most of its labels into the Orchard, as there was no longer a viable local indie alternative.

Brataas then quit his position as head of Phonofile to form a new publishing company, Arctic Rights Management, the official goal of which was ‘to ensure that the rights of Norwegian composers and music publishers are managed locally, seeing off tough competition from major international players’.Footnote6 As addressed above, publishing is considered underdeveloped in Norway, something the founder of Arctic Rights Management, Kai Robøle, explained in this way: ‘In the 1980s and 1990s, the major publishers bought a lot of rights in Norway, but then relocated to Sweden without putting any real effort into utilising the rights’. This, Robøle argued, stuck the publishing sector with a reputation that composers were better off not signing with them. It is also the case that the publishers in Norway are too small to be negotiation partners with Spotify. Like the independent labels, they must instead put up with the privileged position of the three majors, Universal, Sony and Warner, which include both publishing and label divisions (and therefore hold composer rights as well as rights to recorded performances). Again, of course, there are entities capable of representing many independent composers, publishers and other rights-holders – namely, collecting societies.

Collectives, collections and allocations

The head of online music in TONO, Inger Elise Mey, remembered her first phone call from Spotify in Sweden in the autumn of 2007, requesting license to use the composer rights of TONO members. ‘It was a time of numerous online ventures, many of which knew nothing about copyright and only contacted us at the last second’, Mey recalled, ‘but our talks with Spotify lasted for about a year’. Like the major labels, TONO balked at the freemium model, and it had a strong negotiating position as the representative of 100 percent of the national and international repertoire (for use in Norway).

While the majors sought minimum rates from the streams, the collecting society wanted minimum rates for each subscriber. TONO demanded 12 percent of the payment of each subscriber, but, mindful of Spotify’s freemium alternative and participation in a price war which was currently stalemated at 99 NOK, it also demanded at least 12 NOK from each individual user, which, in the case of family subscriptions, far exceeded 12 percent of what each user paid.

The basis of the demand for 12 percent, explained Mey, was the tariff set for iTunes and other download services. When such services arrived, the established price for the use of the right of mechanical reproduction of physical phonograms in Norway was 9 percent of the sale of each copy, collected by the Nordic Copyright Bureau. TONO wanted to handle the emerging field of online media itself and considered on-demand services, which made music available to the public anytime, anywhere, to be also exploiting the right of public performance. ‘We perceived online distributors as combined rights users’, Mey said – an interpretation for which TONO found support in the WCT treaty of 1996 – ‘with download services using 70 percent of the right to reproduction and 30 percent of the right to performance’. Based on this model of rights exertion, TONO was able to increase its demand of 9 percent from physical record sales to 12 percent of online revenues.

When streaming arrived, TONO found that such access-based services ‘comprised even more elements of performance, [including those] associated with broadcasting and concerts’, recalled May, which led TONO’s board to define streaming as using 70 percent performance rights and 30 percent reproduction rights. TONO’s reversal of the percentages attributed to each right inspired similar moves in other countries where streaming was surpassing downloading – Denmark defined streaming as 75 percent performance and 25 percent reproduction, and Israel defined it as 65/35. These decisions would have unforeseen consequences triggered by the EU’s judgment in 2008 that national collecting societies should not hinder rights-holders from choosing a management organisation.Footnote7 The EU has since promoted competition between collecting societies (see Hviid, Schroff, and Street Citation2016). Universal Music Publishing Group was, as mentioned, the first major to withdraw repertoire from TONO, but others soon followed. By 2019, more than 60 percent of the international repertoire had been or was being ‘carved out’ of TONO, as Mey put it. Most of the national repertoire remained, though some successful composers had signed over to rights-management organisations that could offer big earners more attractive terms. However, the major labels were only withdrawing the right to reproduction, while continuing to ask TONO to license the right to performance, which generated substantial income from live concerts and broadcasting. Because TONO defined streaming as 70 percent performance, it retained major licensing responsibilities for the repertoire which was being carved out. ‘We shall see how long this arrangement lasts’, Mey added, ‘because as money accumulates, the interest of big players also increases’.

While TONO’s definition of streaming has enabled it to back up its demands to Spotify, intensified carveout might reduce its bargaining power. As a non-profit organisation, TONO seeks to further the interests of its members, who are primarily Norwegian composers and publishers (approx. 32,000 of them in all). It would therefore enhance TONO’s position if the music streamed on Spotify were created by Norwegians, but, to the organisation’s frustration, this is the case only about 10 percent of the time in Norway: ‘The Finns, Swedes and Danes are much better at listening to their own music’, according to Mey.

Still, several of my informants highlighted TONO as one of the winners of the negotiations with streaming services, including a record label informant who was at once impressed and frustrated by the fact that, ‘when they got a big piece of the pie, there was necessarily less left for others’. TONO stood in sharp contrast to GRAMO, the collecting society for labels and performers, which was not a negotiation party. GRAMO head Martin Grøndahl confirmed that GRAMO managed a compulsory license scheme of equitable remuneration for public performance – one which does not cover cases where ‘the individual can choose time and place of access to the recording’ (a phrase added to the copyright revision of 2005).Footnote8 ‘So, we can make no claims to streaming services, only broadcasters and other public arenas where others control the replay, including cafes and shops’, explained Grøndahl. He added, ‘We wondered if the revision of copyright law in 2018 might loosen the strict division between broadcasting and on-demand services, but it was kept’.

It is notable that an official stand on the issue had not yet been taken by GRAMO’s board, which includes representatives from the interest groups of both labels and performers. One of the deputy board members who represent the performers, Ivar Peersen, worried that ‘many just press play on a playlist and follow the flow of the radio functionalities of Spotify’. ‘As board leader of GramArt’, he continued, ‘I support the idea of GRAMO collecting revenues from the proportion of streaming that resembles the replay of radio’. That process would entail that the performers were represented directly to the streaming services, and that the returns from radio-like streaming would be divided fifty-fifty between performers and labels (as is the case with broadcasting). The record label side of GRAMO, comprised of IFPI and FONO members, rejected this notion, preferring to represent themselves vis-à-vis streaming services and to pay the performers based on their record contract terms. In the balancing act of representing both labels and performers, GRAMO had not challenged the current licensing scheme but rather explored the opportunities which streaming offers to all of its members. ‘For instance, Spotify has developed subscriptions for shops and cafes tailored for its customer base’, explained Grøndahl, ‘and can give us more detailed logs of tracks played than our estimations of radio replays. This makes our payments to labels and performers fairer’.

An aspect of streaming that GRAMO did choose to challenge was the legal basis of a handful of recent services, including Royal Streaming and Epidemic Sound. These services engage composers, performers and producers to make music suited to the purposes of their commissioners, offering an honorarium in exchange for full ownership of the work. ‘This means,’ explained Grøndahl, ‘that whenever their music is played, whether in shops or on television, the makers will receive no equitable remuneration’. GRAMO’s objections were prominently featured in its response to the round of consultations involved in the revision of copyright law in 2018, including that ‘it should not be possible to give away one’s right to remuneration from public performance’, and that ‘it would entail significant problems for exertion of collective rights management’ (Proposition Citation2017, 90). Royal Streaming and Epidemic Sound also responded to the round of consultations, however, underscoring that their model of ‘directly licensed music’ to business partners, including streaming services (but excluding radio), was well-established in Sweden, Denmark, Finland and numerous other countries (Proposition Citation2017, 91). The provisions of the legal authorities in these countries were central to the Norwegian government’s eventual decision to allow for such ‘direct deals’ (Proposition Citation2017, 94).

Services such as Royal Streaming and Epidemic Sound offer predictable ‘up-front rates’ to artists, whose music is then presented to businesses as ‘royalty free’, thereby undermining the negotiating position of the established collecting societies. In order to demonstrate their worth to their members, both GRAMO and TONO have consistently underscored their commitment to the Norwegian music sector and their efforts to expand the use of Norwegian music. In 2019, they even initiated a collaboration titled ‘The Value of Music’ to highlight the significance of their music for businesses in particular.Footnote9 The launch showcased a study finding that the language used in the music played by wine retailers strongly affected the nationality of the wine which consumers bought. Along those lines, they introduced a new site to conveniently license the rights represented by both TONO and GRAMO at the same time via a set of standardised terms and prices, in order to compete with the entrants.

Easy licensing and easy listening

For the interest organisations representing composers and performers, the consequences of streaming have become a key concern, including especially the much greater extent to which streaming promotes passive and internationally oriented listening in relation to record sales and radio broadcasting. Ole Henrik Antonsen, the deputy board leader of NOPA, worried that ‘the music that is streamed in cafes nowadays is based on international playlists, featuring less of the music of our composer members than radio used to do’, and added ruefully that more precise estimations of streaming usage are not likely to benefit NOPA’s composers. Ivar Peersen of GramArt was concerned with the way streaming services increasingly promote playlist-based consumption, ranging from mood-based lists (such as ‘Chill’) to novelty lists (such as ‘New Music Friday’), while continuing to represent the destination for listening to individual records. ‘These are fundamentally different modes of music listening’, Peersen insisted, ‘not least within my own genre of metal music, where we still listen dedicatedly to specific albums’. Peersen considered it highly problematic for GramArt’s artists that both ‘passive and active listening happens in the same sphere and is remunerated in the same way, using the pro-rata model’. As noted above, this model was established in initial licensing negotiations to provide payment based on the percentage of total consumption, thereby favouring easily and frequently repeated music, including hits. Peersen said, ‘We want a user-centric model, whereby the payment of each user is channelled only to the artists he has listened to’, meaning that if a subscriber only listened to a particular Norwegian singer-songwriter for a month, the subscription fee would be targeted to only that artist. ‘Internally, we just call it the fairness model’, added Peersen, who contributed to make the shift to a user-centric model the official policy of GramArt (which was joined by NOPA and FONO in this regard, but not IFPI, which represented the interests of the major labels).Footnote10

The objections to the current remuneration model are closely related to another shared concern of the interest organisations, which is the low proportion of Norwegian music which is streamed relative to onetime levels of physical record sales (BI, Center for Creative Industries Citation2019). Several informants said that they used every opportunity to tell politicians about the challenges confronting Norwegian music in the age of streaming in order to advocate for any enhancement of the existing public support measures for music. Though they are not directly involved in rights-based licensing negotiations, the interest groups are actively involved in discussions concerning the social license of streaming services. In the larger debate over the legitimacy of streaming, parties appear to privilege the overall consequences for Norwegian music making and music culture over any particular group-specific views or legal interpretations of rights. As a few of the informants stated, ‘We discuss a lot of things internally’, whereas externally there were but a handful of issues which tended to arise, primarily involving the user-centric model and the local share. By joining forces on a limited number of issues of shared relevance, the organisations appeared to boost their momentum but also minimised or disregarded differences in interests and underlying arguments which merit more attention.

Conclusion: rewind and fast-forward

There are some striking patterns in the ways in which the various stakeholders involved in music licensing have utilised and even enhanced their bargaining chips when faced with the challenges of the streaming services. For instance, the major rights-holders (Universal, Sony and Warner) have managed to exploit both the volume and the popularity of the content they represent, to such an extent that the smaller indie players had to unite as a ‘fourth major’ (Merlin). It is also clear that an integrated analysis of the relationship between licensors and licensees must take into account external forces such as the EU’s conclusion in 2008 that collecting societies were hindering market competition. This verdict coincided with the launch of Spotify and promptly enabled those major labels to exploit their rights and resources via a new form of direct licensing with a global reach. In turn, the collecting societies had to revisit (and revise) their century-old ways of representing their members’ rights.

It is also striking, however, that the collecting society for composers and publishers, TONO, was able to define the rights use of streaming in a way which was beneficial to its stakeholders. That is, the TONO board defined streaming services as ‘combined rights users’ who impinged upon not only the reproduction rights but also the public performance rights of TONO members. This model enabled the collecting society to increase its demand from record distribution revenues to a higher level than ever before. The decision of TONO’s board to demand 30 percent of its tariff from the use of the reproduction rights and 70 percent from the use of public performance rights was also visionary, in that the majors primarily have ‘carved out’ the reproduction rights to their repertoire. TONO has therefore been able to retain control over a substantial share of the majors’ rights trade, sustaining its bargaining power vis-à-vis streaming services as it awaits further, potentially threatening developments in direct licensing.

The perception of streaming as primarily impinging upon the right to public performance also represents a particular interpretation of the kind of communication which streaming services represent. This assessment stands in sharp contrast to the sidelining of GRAMO from negotiations with streaming services, even though it specifically represents the public performance rights of labels and performers. The reason for this is that the Norwegian copyright law explicitly states that one’s right to equitable remuneration from public performance does not cover cases where ‘the individual can choose time and place of access to the recording’. This phrase was added to the law in 2005, the year that iTunes launched in Norway. Its downloading service could reasonably be perceived to be a digital version of record reproduction rather than the form of public performance associated with broadcasting. Despite comprehensive changes in the communication of music since the arrival of the streaming services, the aforementioned phrase has not been challenged. While GRAMO represents both labels and performers, major and indie labels are better served by representing their recording rights directly to the streaming services. As is the case with physical record sales, then, the performers are remunerated based on the terms of their label contract, which usually give featured artists a sales percentage (royalty) and session musicians a one-time honorarium. If streaming were treated as public performance, however, then the revenues would be split fifty-fifty between the labels and the performers.

The overall impression here is that composers and labels have been relatively successful in taking advantage of the opportunities associated with licensing to streaming services, whereas performers have a way to go. This impression can be related to a historical pattern whereby the protection of composers has led while the performers’ rights have lagged (Fleischer Citation2015). A remarkable step forward for the performers was represented by the Rome convention of 1961, which agreed on a compulsory license giving equitable remuneration for public performance. The legacy of this win has been challenged by the turn to online music media, underscoring the relevance of examining the relationship between one’s definition of public performance and the development of streaming services.

Such an examination should include a critical evaluation of the distinctions made between public performance and individual consumption. For a long time, there were relatively straightforward distinctions between retail to private individuals and the dissemination developed by broadcasters. In the digital environment, these distinctions have been blurred – for example, many online radio channels allow listeners to pause, rewind and time-shift their otherwise centrally dispersed programming. On the other side of the fence, on-demand services have increasingly facilitated shared and coordinated listening, including recommendations based on what others have played and playlists featuring topical or trending tracks. This all calls for a reassessment of the rationale for equitable remuneration based on public performance.

In the Rome convention, sales to individuals were considered to comprise a primary market for records, while the exploitation of those records by media companies, such as when radio stations used music to target their desired market segments, was considered a form of ‘secondary utilisation’, the returns of which performers should also be entitled to share in (Ulmer Citation1962; Fleischer Citation2015). While streaming services still cater to individual consumption, they also pursue new forms of secondary utilisation through their centralised programming of music, conveying music in ways that increase their own value. By not only offering access to music but also orchestrating its consumption via increasingly advanced recommendation algorithms and playlist curation, the streaming services become attractive partners for anyone wanting to reach out with their music. In fact, when Spotify debuted on the New York Stock Exchange in 2018, it noted, ‘Given the success of our playlists in driving music discovery, they have become one of the primary tools that labels, artists, and managers use in order to boost artists and measure success’, and it added that the percentage of listening it was programming was rapidly growing (Spotify Citation2018, 4). By developing effective gateways to the audience, including various promotion packages, the streaming service enhanced its bargaining position vis-à-vis the rights-holders, who have worked hard to negotiate acceptable terms and conditions. Considering the ways in which Spotify has developed novel means of utilising music to substantiate its own value, it could be argued that part of that profit should be channelled back to the makers of the music, including the performers.

This argument is supported by the continued effort to program consumption, which effectively reduces the amount of listening whereby ‘the individual can choose time and place of access to the recording’. In this phrase, however, the word ‘can’ complicate things. Does the fact that the individual can start, stop and time-shift replay while streaming negate the fact that the listening is centrally organised? People also start and stop their radios, and, like the radio, Spotify always plays new songs until you actively intervene. When the Norwegian government addressed the boundaries between on-demand services and broadcasting in its proposition for copyright revision in 2017, it stated that ‘decisive to the assessment is who initiates the transmission’ (Proposition Citation2017, 92). Furthermore, radio was still to be considered broadcasting, even when it featured interactive opportunities such as delayed replay. Thus, it was not decisive whether people were able to alter the time of consumption, let alone ‘whether the receiver actually uses the opportunity’. By the same token, listening to the tracks of the programmed playlists of Spotify could be considered ‘service initiated’, though the listener can choose a different time for the tracks’ replay. If one does so, it is no longer clear whether the revised copyright law denies support to a claim of equitable remuneration to performers from streaming. One reason why such conclusions have yet to be drawn is that the notion of personalised listening is strongly associated with what are still called ‘on-demand services’.

One claim which has been pressed repeatedly, however, involves the shift to a user-centric remuneration model. The claim to direct payment from individual consumers to artists arguably shares several similarities with the claim to equitable remuneration to individual artists from public performance. Both claims insist on a more direct link between listeners and composers/performers and invite more reciprocity between acts of consumption and acts of production. This dialogic ideal clearly casts into doubt the orientation towards dissemination and audience reach which has long been favourable to streaming services and the major rights-holders – an orientation which has been fully realised by recent services such as Royal Streaming, which seeks complete ownership of music which is explicitly designed for large-scale and brand-friendly consumption. If Attali (Citation1977, 4) was right that the way in which music is organised is ‘a mirror of society’, then such services reflect a society where creators and creativity are increasingly controlled by commercial companies and commissioners. It is not just the legal basis of the licensing of recent services which can be questioned, then, but also those services’ broader social and political license.

The social and political conditions for the negotiations studied in this article have been those of Norway, a small country in the Nordic region characterized by small music markets and a long tradition of protecting the national portion of those markets. The fact that Norway’s population spearheaded the use of international streaming services underlines the likelihood that the response to streaming here has been different from that of countries with larger markets which have evolved differently and under other policy priorities. This article’s ambition to explore the agency of several stakeholders and evaluate contemporary licensing relations has also brought with it a vulnerability in terms of the depth of analysis of each voice. Such shortcomings will hopefully inspire further examination of specific rights-holders, organisations and relationships, as well as studies of developments in licensing in other countries and regions – something which the ongoing implementation of new EU copyright regulations invites already.

Acknowledgments

This article is produced in association with the University of Oslo research project titled ‘Music on Demand: Economy and Copyright in a Digitized Cultural Sector’ and is funded by the Research Council of Norway [grant number 271962].

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Research Council of Norway [271962].

Notes on contributors

Yngvar Kjus

Yngvar Kjus field of research is music and contemporary media and his work has been published in Media, Culture and Society, Popular Music, New Media and Society, Convergence, Popular Communication, Poetics, and Popular Music and Society. He is the author of the book Live and Recorded: Music Experience in the Digital Millennium (Palgrave MacMillan 2018).

Notes

1. The Norwegian Copyright Act for Intellectual Property [Lov Om Opphavsrett Til Åndsverk]: https://lovdata.no/dokument/NL/lov/2018-06-15-40. All Norwegian sources in this article have been translated by the author.

4. Organisation website: http://www.merlinnetwork.org/what-we-do.

7. CISAC v. European Commission (case T-442/08).

10. Recently, in March 2021, the user-centric model was launched for the first time for the independent artists of the service SoundCloud: https://www.soundcloud.com.

References