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News January 28, 2022

U.K. competition watchdog starts landmark probe into streaming services

Senior Journalist, B2B
U.K. competition watchdog starts landmark probe into streaming services

Spotify, Apple Music, YouTube and all their rivals in the streaming music world will be placed under the microscope by the U.K.’s competition watchdog following a vocal campaign to redistribute the wealth.

This week, the Competition and Markets Authority (CMA) announced it would scutinise the streaming industry and their content providers after MPs argued that the streaming model ought to be rebooted.

The CMA “will ask whether the music streaming market is working well for music lovers,” as part of a new study that will examine the entire streaming ecosystem, from creator to consumer, and “paying particular attention to the roles played by record labels and music streaming services.”

That probe, which launched Thursday (Jan. 27), follows a damning report published last year by parliament.

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In it, the Department of Digital, Culture, Media and Sport (DCMS) argued that “streaming needs a complete reset,” and, among its top five recommendations, called for government to enact legislation so performers can enjoy “the right to equitable remuneration for streaming income.”

That is now happening.

As part of its assessment, the CMA will consider “whether innovation is being stifled and if any firms hold excessive power.”

In one of the most telling lines from its announcement, the CMA says its study will also develop a “deeper understanding” of how music companies in the market “influence listeners’ choices and experiences.”

Put simply, the finger will also be pointed at the Universal Music Group, Sony Music and Warner Music Group.

“While focusing on potential harm to consumers,” reads the announcement, “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.”

Music streaming in the U.K. brought in more than £1 billion in revenue and generated 114 billion music streams, explains a parliamentary primer, however artists can be paid as little as 13% of the income generated.

According to the CMA, more than 80% of recorded music is now listened to via a streaming service.

Spotify, Amazon, and Pandora propose even lower streaming royalty rates

According to official figures published recently by the BPI, based on Official Charts Company data, recorded music consumption in the U.K. rose by 2.5% in 2021, for 7th year of growth.

Streaming was the steam engine, as Brits listened to 147 billion individual audio streams, up 5.7% on 2020, according to the BPI report.

Calls for a fairer streaming model have reached a crescendo in recent years, and they’re loudest in a country already slammed with the pandemic and issues surrounding Brexit.

The biggest acts in British music history signed up for the #BrokenRecord campaign, which petitioned Prime Minister Boris Johnson to solve the problem and, separately, the United Musicians and Allied Workers Union organised a series of global protests (including the U.K.) under the banner, “Justice at Spotify.”

Image of a person accessing Apple Music on an iPhone

Apple Music

The CMA now casts the net for comments on any of the issues raised in its Statement of Scope and the accompanying Market Study Notice, with an invitation for consumers, businesses and other interested parties to participate.

The clock is ticking. With the publication of its market study notice, authority has a maximum 12 months to set out its findings and the action — if any — it proposes to take.

“Whether you’re into Bowie, Beethoven or Beyoncé, most of us now choose to stream our favourite music,” comments CMA Chief Executive Andrea Coscelli.

“A vibrant and competitive music streaming market not only serves the interests of fans and creators but helps support a diverse and dynamic sector, which is of significant cultural and economic value to the U.K.,” Coscelli continues.

“As we examine this complex market, our thinking and conclusions will be guided by the evidence we receive.”

Whatever the result, every business with ties in music will be watching closely.

Read the CMA’s Market Study Notice here.

This article originally appeared on The Industry Observer, which is now part of The Music Network.


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