LONDON – UK MPs called for a “complete reset” of music streaming on Thursday. While lawmakers largely focussed their criticism on major labels, not services like Apple Music, the committee’s chairman Julian Knight MP  said that they “have real concerns about the way the market is operating, with platforms like YouTube able to gain an unfair advantage over competitors and the independent music sector struggling to compete against the dominance of the major labels.”

Apple Music Lossless ‘Exarcebating’ Streaming Industry Issues

The committee’s report said that “there has been a continuous fall in average revenue per user (ARPU) for streaming services and therefore, by virtue of the revenue…the music industry.” It said this problem could be “exacerbated” by Apple and Spotify offering lossless audio without any price increasing.  The report also noted that for the likes of Apple and Amazon’s music streaming is regarded as a loss leader.

Evidence From Apple Music

Included in the report is a summary of the evidence Apple gave to the committee. No surprise that its representatives “spoke several times about how its business model has reflected its pro-privacy values that differentiate its products to those of other tech companies.” When giving evidence, Elena Segal, Global Senior Director of Music Publishing at Apple rejected the idea of a potential ad-supported model. She said: 

We do not think that an ad-supported service can generate enough revenue to support a healthy overall ecosystem and it would also go against our fundamental values on privacy.

[Apple Music Pays Artists up to Three Times More Than Spotify Per Stream]

‘Safe Harbor’ Advantage For YouTube

While Apple and Spotify are important parts of the music streaming industry, they pale in comparison to YouTube. The Google-owned video platform has two billion active monthly users. Apple Music has 60 million monthly subscribers, while Spotify has 320 million active users. Indeed, in the UK YouTube “is second only to radio as the means for discovering new music.” There was criticism for so-called ‘safe-harbor’ provision. This exempts platforms that host user-generated content from legal liability for copyright infringement until they obtain “actual knowledge” of it. This, of course, is to YouTube’s benefit. When giving evidence, Apple’s Ms. Segal, said:

The fact that [YouTube] do not necessarily have licences for all of the music that they use and that they do not need to. Even where they do have licences the amount they pay, because of the way their business model is set up and the way the tariffs work, is less.

In Conclusion…

The reported concluded that the move to licensing and streaming has been positive. However, in a key recommendation, the lawmakers called on the UK government to “legislate so that performers enjoy the right to equitable remuneration for streaming income.” They also want Apple Music and Spotify to follow a “code of conduct” to avoid bribes and favortism when curating music, for example, when creating playlists.

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