According to BPI, the British recorded music industry’s trade association, streaming currently accounts for 83% of UK music consumption. The CMA has now launched a market study into music and streaming services, asking whether the music streaming market is working well for music lovers.
Linking the creators making the music and the fans listening to it through a streaming service is a complex network of companies that help make, promote and distribute recorded music.
The DCMS Select Committee report on the ‘Economics of music streaming’ argued that the major music groups – Sony Music Group, Universal Music Group and Warner Music Group – ‘dominate’ the industry and have consolidated their market position by becoming the largest asset owners of recording and song rights. The report also pointed to commentary that the major music groups are experiencing historic levels of profitability. In contrast, it is argued that songwriters and performers receive only a small proportion of revenue.
Within music streaming services themselves, the Committee noted that there is a potential for some services which have a strong position in other markets, such as smartphones or voice assistants, to leverage that aspect of their business to gain a competitive advantage over other music streaming services that do not have such wider businesses. It is also argued that the contractual agreements between the major music groups and streaming services may have a negative impact on innovation by streaming services and influence the music promoted to consumers.
The CMA’s study will examine the music streaming market, from creator to consumer, paying particular attention to the roles played by record labels and music streaming services.
As part of its assessment of how well the market is working for audiences, the CMA will consider whether innovation is being stifled and if any firms hold excessive power. The CMA’s study will help build a deeper understanding of how firms in the market influence listeners’ choices and experiences.
While focussing on potential harm to consumers, the CMA will also assess whether any lack of competition between music companies could affect the musicians, singers and songwriters whose interests are intertwined with those of music lovers.
If the CMA finds problems, it will consider what action may be necessary. The CMA must, within 12 months of publication of a market study notice, publish a market study report setting out its findings and the action (if any) it proposes to take.
The CMA is committed to fostering effective competition in digital markets and is working in a number of areas to achieve this goal. Its work includes investigating Google’s ‘privacy sandbox’, Facebook’s use of ad data and Apple’s AppStore. The CMA has also begun a market study of mobile ecosystems as well as launching the Digital Markets Unit in April 2021 – which is operating in shadow form pending legislation that will provide it with its full powers. An independent CMA Inquiry Group is also separately investigating Sony’s completed acquisition of ‘artist and label’ services provider AWAL.
The market study takes place in parallel to a wide range of work being done by the government in these markets. While the CMA’s work will focus on competition issues, it says that it will maintain a coherent approach with other related work including initiatives being undertaken by the Department for Digital, Culture, Media & Sport, the Intellectual Property Office and the Centre for Data Ethics and Innovation.
