Transfer of Value overview
Transfer of Value and the music industry
Here’s our quick overview of what the ‘transfer of value’ is and how it is affecting our industry...
What is Transfer of Value?
Transfer of value is the term used to describe the way the value of creative works (i.e. songs, musical compositions) has transferred away from the songwriters and composers to the platforms which host and make money from them.
These platforms have built multi-billion-dollar businesses by providing access to creators’ works, while paying little or no royalties.
What does transfer of value mean in practice?
In short, for music creators, it means that they are not receiving fair remuneration for the online use of their works.
More broadly speaking, these online platforms are harming the fully-licensed streaming providers who are forced to compete with free (ad-funded) services who don’t have the same costs (i.e. royalty payments to creators). The net effect is a devaluation of music and creative works online, with user upload platforms growing at the direct expense of creators. With such dysfunction in the online market for music, it is impossible to accurately quantify the harm caused, or the value lost, by the transfer of value.
However, it is clear that there are major services which refuse to pay a sum that truly reflects the value of the music they use. As a general rule, it is widely accepted that within Europe, certain user uploaded platforms pay between 5 to 10 times less per stream than services like Spotify or Apple Music.
How has this happened?
There is ambiguity in the current EU legal framework which certain platforms use to claim that they are not liable for the use of copyright works on their site.
What is the solution?
The law must be clarified so that online platforms, in particular those which host user uploaded content, are undertaking an act of copyright and therefore must agree a license with rightsholders.
What is being done about it?
PRS, along with other industry organisations, have been at the vanguard of raising awareness of the transfer of value. The European Commission heard us and in September 2016 published a proposal for a copyright Directive that would work to remedy the issue, containing provisions to clarify the liability of online platforms and prevent the misapplication of the legal ambiguity. Such changes would put rightsholders on a better footing when negotiating licenses with platforms, potentially resulting in increased revenues.
How can you, as a PRS member and music creator, help?
You can sign the ‘Make Internet Fair’ petition. The is one of the most important petitions from creators in recent years, it calls on Members of European Parliament (MEPS) to fix the transfer of value. We need to put pressure on those MEPs to vote in support of a fair and balanced online marketplace. Make your voice heard in Brussels so that the new Copyright framework protects your interests, only then will creators be able to properly share in the value which their works are generating online.
How can you, as a PRS member, get involved?
Together with The Ivors Academy, we have been running a Creator Voice programme. An initiative designed to give creators and their representatives the opportunity to influence the political decisions that will impact their career and their industry. Click here or email policy@prsformusic.com to find out more.
