DIMA Testimony Before the Culture, Arts, and Communications Committee (Chile)

leer En Español

Madame President Delgado and members of the Culture, Arts, and Communications Committee, thank you for the opportunity to speak to you today.

My name is Graham Davies, and I am President and CEO of the Digital Media Association representing the world’s leading audio streaming services: Amazon, Apple Music, Spotify, YouTube, Pandora, and Feed.fm.

——-

Our mission is to promote and protect the ability of music fans to legally access creative content, as well as make it easier for artists to connect with current fans and with new audiences. Streaming has positively transformed the music industry and has become a driving force for growth of the sector. According to the International Federation of the Phonographic Industry (IFPI), in 2023 86.3% of recorded music revenues in Latin America came from streaming, a market that in 2023 had celebrated its thirteenth consecutive year of growth and is now valued by USD$1.5 Billion.

—–

DIMA members work in partnership with the broader music industry. DIMA members obtain licenses and compensate rights holders for the use of music on their platforms. In turn, those rights holders, such as record labels, music publishers, and collective management organizations, are responsible for distributing the revenues received from the streaming services to performers, composers, and other creators.

To be clear: DIMA members do not pay artists directly. They obtain licenses from rights holders and pay those entities, which are then responsible for allocating payments to the artists and creators they represent.

—–

Under this successful model, the music industry is seeing continuous growth in Chile, and Chilean artists are reaching new audiences at home and around the world.

In the case of Chile, the current legal framework already requires DIMA’s members to license multiple types of music rights—including those of record labels, publishers, and collecting societies. We are proud that this model is generating record revenues: in 2023, Chile registered a 32.4% growth in its music collections, ranking among the 30 most relevant markets worldwide. By 2024, it is estimated that the Chilean music sector reached revenues of US$199.85 million, with streaming accounting for more than 85% of the total recorded music market.

——-

This success is the result of decades of effort to innovate, organize, and strengthen a sector that was once defined by piracy, legal uncertainty, and limited access for both artists and audiences. Only in the last 10–15 years have consumers gained access to legal, affordable, and high-quality digital music services, while artists have gained unprecedented reach and

new opportunities to share and monetize their work. This transformation has helped democratize access to music, both in terms of availability and the ability of artists to connect with new audiences.

—–

We deeply value the efforts of the Congress of Chile and the Commission to promote the recognition and protection of artists and the national cultural heritage.

However, after a detailed review of the proposed bill, we would like to present some specific observations and recommendations on provisions that, in our view, could have unintended and unwarranted impacts on the Chilean music and digital ecosystem. We believe that these comments are essential to ensure that any new regulation achieves its intended outcome and does not inadvertently jeopardize the success of the Chilean music industry.

The bill introduces a new, non-waivable and non-transferable right for performers to obtain equitable remuneration from whoever makes their fixed performances available to the public, even when rights have already been licensed and paid for through existing agreements.

Indeed, under the proposed bill, digital services would be required to pay twice for the same stream: once through their existing licensing agreements with rights holders, and again through a collective management organization (CMO).

——

From our perspective, this would be equivalent to a double payment for the same use, which directly impacts the economic sustainability of the streaming model. Today, digital services from music streaming pay approximately 70% of their revenue in the form of royalty payments to holders of rights, through agreements with labels, distributors, management companies and publishers.

While we support the goal of ensuring adequate protection for artists, we believe that, as currently drafted, the bill would have adverse effects that negatively impact the musical ecosystem. Imposing additional payments would compromise the viability of this model and could affect investment in talent, the expansion of catalogues, the development of new artists, and generate potential unnecessary disputes between parties.

——

Although a number of countries have explored ways to modify remuneration for performers in the digital environment, none have implemented a model like the one proposed in this bill. Similar initiatives have been considered in other jurisdictions but, after careful evaluation, were ultimately not adopted due to the legal uncertainty and operational complexity they create, as well as the risk of jeopardizing the viability of streaming services and the overall music ecosystem.

—–

Furthermore, the bill establishes that the new remuneration will be managed “through the collective management entity that represents them”, without providing for other forms of administration, such as direct management by the artist or through private agreements.

This provision imposes a mandatory scheme of intermediation that can restrict the contractual autonomy of artists. In addition, in its current wording, the bill generates possible conflicts with contractual agreements.

—–

This is aggravated in the absence of clear mechanisms for coordination between the entities management and digital services.

It should be noted that collective management organizations are not usually involved in the licensing of performers’ rights in the digital environment, since the responsibility to transfer payments for digital services to performers falls on the rights holders (record labels and distributors) who already receive payment from the streaming services for copyrights related to the use of the sound recordings.

—–

The music industry requires clear rules, predictable costs, and stable legal frameworks to thrive. Under the current model, record labels pool creative contributions to produce a

recording and license the rights included in the recording to the platforms. Introducing an additional new payment obligation on the services could add complexity to the licensing process and reduce the flexibility of intermediaries and artists to choose how to manage their rights and business relationships.

Chile has positioned itself as a key country for the development of digital music in Latin America. Imposing rigid regulatory measures and additional costs without an adequate technical impact analysis on the economics and the effects on affordability of services for consumers, could reduce the repertoire that is made available and limit the international promotion of Chilean artists, with potentially devastating impacts on the music industry.

—-

We reiterate our commitment to advancing fair remuneration for performing artists within a system that is already delivering value and growth. We believe this goal can, and should, be achieved without:

1. Limiting the contractual flexibility of artists,

2. Undermining the viability of digital services by introducing additional remuneration obligations already covered under existing agreements, or

3. Restricting Chilean artists’ access to the global music scene by placing additional burdens on the streaming services that help connect them with broader audiences.

Therefore, we respectfully suggest that the possibility of adjusting the bill be evaluated to avoid duplication, preserve contractual autonomy, following international best practices and the recent experience in the region. The Chilean music industry is a success story, and we are committed to continuing to play our role to ensure fans can listen to what they want to hear and artists can reach audiences at home and around the world.

Thank you for your time and I would be happy to answer any questions.