In January 2022, the CMA initiated a market study into music and streaming services. Among other things, this was prompted by a select committee report raising various concerns about the sector. The CMA has now published its initial findings on music streaming and subject to consultation, does not plan to make a market investigation reference.
The CMA’s findings include the following:
- Streaming has transformed the music industry. Recorded music revenues reached £1.1 billion in 2021, with 80% of recorded music now listened to via streaming services. Last year, there were over 138 billion music streams in the UK.
- Listeners have access to a huge choice of music for a fixed monthly subscription fee. These fees have fallen in real terms.
- Access to a wide range of music, both old and new, means older songs can more easily have a new lease of life and find new audiences. 86% of streams in 2021 were for music over a year old.
- Digitisation has made it easier than ever for many more artists to record and share music and find an audience. The number of artists streaming music has doubled between 2014 and 2020 – from around 200,000 to 400,000.
- Although more artists are releasing music, and they have more choice than ever before as to how they release their work, the market remains challenging for many creators. The industry’s income is broadly stable, but more artists are offering more music. It’s nothing new, but while a small number of high-profile artists enjoy huge financial success, the large majority do not achieve substantial earnings.
- Against the backdrop of 138 billion overall streams in 2021, CMA analysis has found that one million streams per month could earn an artist around £12,000 a year.
- The three major record labels play a key role in the recorded music sector. The evidence the CMA has seen does not show that this concentrated market is currently causing consumers harm or that it is driving the concerns raised by artists. Neither labels nor streaming services appear to be making sustained excess profits.
- Evidence indicates that new artists today are more likely to be offered higher royalty rates and shorter contract terms than in the past.
In a decision which is likely to please some players in the market more than others, the CMA says that on balance, its initial analysis indicates that the market is delivering good outcomes for consumers. However, it emphasises that it would have concerns if the market changed in ways that could harm consumer interests. For example, it would be concerned if innovation in the sector decreased, or if the balance of power changed and labels and streaming services began to make sustained and substantial excess profits, or if there was difficulty in switching between streaming services.
The CMA is consulting on its proposal to not make a market investigation reference and requests feedback by 19 August. The CMA’s statutory deadline for publishing its market study report is 26 January 2023.
It is interesting that the CMA has concentrated on the issue of consumer impact in its decision-making. There are other issues around market transparency, data and fair remuneration, which remain areas of concern for some in the industry. In connection with this, it is worth noting that the Intellectual Property Office is also currently carrying out research about fair remuneration, transparency, and data. The CMA says that it will share its analysis with the DCMS, the IPO and the Centre for Data Ethics and Innovation to help inform their work examining whether artists’ rights can be strengthened for music streaming.
Our study has assessed the impact streaming has had on the music sector and whether competition is working well for consumers by delivering high-quality, innovative services for low prices