Study into the Music Streaming Market to be launched by U.K’s CMA
The UK Competition and Markets Authority (CMA) will oversee a market study into music streaming. This is the latest step in the CMA’s strategic goal to foster effective competition in digital markets and ensure that they operate in a way that promotes innovation and the consumer interest.
The music industry, battered by piracy in the late 1990s, moved towards a streaming model backed by either advertising or subscriptions as a way to secure more sustainable revenue for the sector. Figures show that the global recorded music market rose by 7.4% in 2020 to $21.6 billion, with a jump in demand for paid streaming services leading the way.
The advent of streaming has made music cheaper, more personalised and more readily available to consumers, but it has also raised significant questions about the structure and sustainability of the recorded music industry.
In July 2021 the Digital, Culture, Media and Sport (DCMS) Committee published a report regarding its inquiry into the economics of music streaming. Therein, a series of concerns were raised regarding the possible market dominance of the major music groups and potential for contractual agreements between the major music companies and streaming services, which could stifle innovation in the streaming market.
Among other potential issues, the Committee highlighted concerns regarding the lack of transparency and low remuneration to musicians and performers, which could diminishing the UK’s ability to support new domestic talent.
The Committee further commented that it considers the fact that the three major music companies cover up to 70% of the UK recording market together with the major labels’ publishing operations and equity stakes in streaming services a risk distortion of competition in the recorded music market. The Committee therefore recommended that the CMA conduct a market study in this area.
Market studies are a key tool for the CMA to identify any competition and consumer issues and – if appropriate – to consider how best to tackle any problems.
In CMA Chief Executive Andrea Coscelli’s recent letter to the Government and the DCMS, she said:
“Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80% of all music listened to in this country. A market study will help us to understand these radical changes and build a view as to whether competition in this sector is working well or whether further action needs to be taken”.
This market study has therefore been prioritized by the CMA and is the next study the Authority will undertake in this field.
However, the CMA noted that market studies merely "examine why particular markets may not be working well for consumers." Based on its findings, the watchdog can either recommend the U.K. government changes regulations or public policy; encourage the market to self-regulate; take law enforcement action against companies; move on to more in-depth investigation; or give the market the "all-clear".
The prioritising of the study is not in itself confirmation that the streaming industry suffers from competition issues, so for the time being the only guidance to give is “watch this space”. Although the probe only applies to the U.K., the world – and especially the international music industry – will be watching.