Britain’s competition watchdog has launched an in-depth study into the booming music streaming market to assess whether major record labels and services such as Spotify wield “excessive power” and whether artists and fans get a fair deal.
The Competition and Markets Authority (CMA) was asked to launch the study after a scathing report from a cross-party committee of MPs last year called for a ‘complete reset’ of a model of streaming that she said only benefited major labels and superstars.
Music streaming now dominates fans’ listening habits and accounted for 80% of the UK industry’s total revenue of £1.7billion last year. Subscription spending on services such as Spotify, Apple Music and Amazon Music hit £1.3bn, compared to just £135.6m for vinyl albums and £150m for CDs.
“Whether you love Bowie, Beethoven or Beyoncé, most of us now choose to stream our favorite music,” said CMA Chief Executive Andrea Coscelli. “A vibrant and competitive music streaming market not only serves the interests of fans and creators, but helps to support a diverse and vibrant sector, which has significant cultural and economic value to the UK.”
The AMC said the market study, which will examine the streaming industry from “creator to consumer,” will pay particular attention to the power and influence of record labels and music streaming services.
“The CMA will look at whether innovation is being stifled and whether corporations are wielding excessive power,” she said. “The CMA will also assess whether a lack of competition between music companies could affect musicians, singers and songwriters whose interests are closely related to those of music lovers.”
The study will assess whether or not there is a need for a full competition investigation and whether the government should legislate to improve the UK music market, take enforcement action against businesses, encourage industry self-regulation or allow it to continue as it does now. .
“As we examine this complex market, our thinking and conclusions will be guided by the evidence we receive,” Coscelli said. “If the CMA finds any issues, it will consider what action may be necessary.”
The streaming revolution has given major music labels their mojo back. Last year Universal Music, the world’s biggest music company and home of artists from Taylor Swift to the Beatles, launched at a valuation of 45 billion euros (£38 billion). Warner Music, bought by Sir Leonard Blavatnik for $3.3bn (£2.5bn) in 2011, is now valued at over $22bn.
The Culture Select Committee report in July looked at the streaming economy and noted that the world’s three largest music companies: Universal Music, Sony Music and Warner Music, control around three-quarters of the UK streaming market. registration, allowing them to conclude more and more advantageous agreements. with streaming companies such as Spotify.
In contrast, most artists say they don’t get a fair share of the royalties from the streaming deals they have as part of their recording contracts.
“Streaming has led to an explosion of choice for music fans and creators in the UK,” said a spokesperson for the BPI, the industry body representing the UK recording industry. “The BPI looks forward to working closely with the CMA to help them understand the changes streaming has brought to the music market.”
The CMA has until July 26 to issue an interim report on the market investigation’s preliminary findings, including a decision on whether it believes there may be grounds for a full market investigation.
The regulator then has until January 26 next year to publish the full report and formally open a full investigation, if it deems it necessary.