CMA will examine whether platforms such as Spotify give fair deal to consumers
Britain’s competition watchdog is to launch a study into the music streaming market to assess the dominance of big record labels and platforms such as Spotify, and whether artists are getting a fair deal in the streaming era.
The market study, which has been launched by the Competition and Markets Authority after a recommendation by the UK government last month, follows a highly critical report by MPs calling for a “complete reset” of the streaming model, saying it only benefits big labels and superstar acts.
“The UK has a love affair with music and is home to many of the world’s most popular artists,” said Andrea Coscelli, the chief executive of the CMA. “We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers.”
The CMA said that over the last decade the music industry had evolved “almost beyond recognition”, with streaming accounting for more than 80% of all music listened to in the UK.
“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.”
The market study will assess whether there is a need for a full competition investigation, and whether the government may need to legislate to improve the UK music market, take enforcement action against firms, encourage industry self-regulation or give a “clean bill of health”.
The report published in July by the culture select committee of MPs into the economics of streaming noted that the world’s three biggest music companies – Universal Music, Sony Music and Warner Music – control about three-quarters of the UK recording market, allowing them to strike increasingly advantageous deals with streaming companies such as Spotify.
However, most artists say they do not then get a fair share of royalties from the streaming deals they have as part of their record contracts.
The regulator is carrying out further work to define the final scope of the market study, before formally launching it “as soon as possible”.
In a letter to Julian Knight, the chairman of the Commons culture select committee, Coscelli said the CMA would act quickly to get the market study up and running.
“In the light of the concerns you have collectively expressed, this work should be prioritised,” he said. “That is, it should be the next market study that the CMA launches.”
More than 40 Conservative MPs have written a letter to Boris Johnson calling for legislation to be introduced to “fix streaming”, warning the iniquity of the royalty payment model is threatening the livelihood of British musicians.
“Like many sole traders and contractors, musicians have had a tough year,” said former cabinet minister Esther McVey, who has led the coalition of 44 Tory MPs who have co-signed the letter. “If we want to build back better, big international corporations who have benefitted from the government’s help during the crisis should start paying musicians properly for the music they use.”
A private member’s bill calling for a change to legislation to benefit artists is to be put before parliament in December.
Separate to the market study, an independent CMA panel is investigating Sony’s $430m (£312m) acquisition of the artist and label services provider AWAL, which has released music by artists including Little Simz, Nick Cave and the Bad Seeds and Billie Eilish’s brother and collaborator Finneas.
The CMA said that the takeover could lead to worse deals for musicians. Had it not gone ahead, AWAL could have continued to grow into a significant alternative competitor, the watchdog argued.
The music streaming investigation is the regulator’s latest step in a push to increase competition in digital markets.
It is investigating Amazon and Google over concerns that the tech companies have not done enough to tackle fake reviews on their websites. The CMA launched a digital markets unit in April, which is operating in shadow form pending government legislation that will provide it with full powers.