The Competition and Markets Authority (CMA) has concluded its independent study into the music streaming market.
It’s the latest development in the scrutiny of the industry, which began with the DCMS Committee inquiry into the economics of streaming two years ago.
The Competition and Markets Authority (CMA) has published its final report and - no surprise, given its interim findings - found that consumers have benefited from digitisation and competition between music streaming services. See below for industry reaction to the report.
The CMA has found that prices for consumers have fallen by more than 20% in real terms between 2009 and 2021, alongside ad-funded services.
The study found that there were around 39 million monthly listeners in the UK, streaming 138 billion times a year. During the follow-up DCMS Inquiry hearing, MPs heard evidence that Spotify has 20 million users in the UK alone.
The CMA also heard concerns from artists and songwriters about how much they earn from streaming. The competition regulator found that over 60% of streams were of music recorded by only the top 0.4% of artists.
However, the CMA found that the concerns raised by artists are not being driven by the level of concentration of the recording market. Their analysis found that “neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators”.
Instead, the issues concerning creators would need other policy measures in order to be addressed, according to the CMA. A working group has been established with the Intellectual Property Office and music industry representatives.
The CMA report underlines the fact that there is greater competition to reach listeners (and, therefore, for the associated streaming revenues). The study found that an artist could expect to earn around £12,000 from 12 million streams in the UK in 2021, but less than 1% of artists achieve that level of consumption.
Parts of the streaming market have improved for some creators in recent years, with the CMA finding a greater choice of deals with record labels available. The report highlighted that, on average, royalty rates in major deals with artists have increased steadily from 19.7% in 2012 to 23.3% in 2021. For songwriters, the share of revenues going to publishing rights has increased from 8% in 2008 to 15% in 2021, as the market has transformed from physical to digital.
Sarah Cardell, interim CEO of the CMA, said: “Streaming has transformed how music fans access vast catalogues of music, providing a valuable platform for artists to reach new listeners quickly, and at a price for consumers that has declined in real terms over the years.
“However, we heard from many artists and songwriters across the UK about how they struggle to make a decent living from these services. These are understandable concerns, but our findings show that these are not the result of ineffective competition - and intervention by the CMA would not release more money into the system that would help artists or songwriters.
“While this report marks the end of the CMA’s market study, which addresses the concerns previously posed about competition, we also hope the detailed and evidence-based picture we have been able to build of this relatively new sector will provide a basis that can be used by policymakers to consider whether additional action is needed to help creators.”
MUSIC INDUSTRY REACTION
“We welcome the CMA’s objective, evidence-based report which confirms that the streaming market is competitive – delivering fans accessible and affordable music and artists greater choice in an environment in which many more are succeeding and where artist and songwriter royalty rates have increased. As the most definitive analysis of these issues to date, this report will help inform the work that we and industry are already doing in partnership with government to further strengthen British music and ensure the UK remains competitive globally. The report reinforces our view that the most effective way to enable even more artists to have a sustainable career in music is for labels to keep investing in talent and grow the market.”
Paul Pacifico, CEO, Association of Independent Music
“While consumers have clearly benefited enormously from greater access to music at decreasing cost, we must take care to ensure music is not undervalued and that we balance that with the opportunity for more creators to benefit from a sustainable digital ecosystem. The independent sector has led the way in developing the innovative deal structures and business models that the CMA highlights as having been key in evolving music’s response to digital disruption and we need to ensure any measures the government may consider do not harm those essential entrepreneurs and investors in creative careers. Going forward, we must continue to work together as an industry on transparency and data to maximise the opportunity for our industry that the streaming inquiry represents.”
Graham Davies, chief executive of The Ivors Academy
“The CMA has asserted that it is the government’s responsibility to introduce policy interventions to support music creators. While consumers have never had it so good the system is concentrating earnings to an unsustainable extent. Streaming benefits consumers and rewards few music creators. The creative industries are central to the UK’s economic success and they rely on creators, but they are leaving the industry because of threats to live music, the disastrous impact of Brexit on touring and the cost of living crisis. We need action to fix streaming.”
Annabella Coldrick, chief executive, Music Managers Forum & David Martin, CEO, Featured Artists Coalition
"The CMA report today focuses on how music streaming has benefited consumers and does not find that a competition intervention would be beneficial. However, it acknowledges that other issues raised by artists, songwriters and managers, including fair remuneration and transparency, require a different kind of scalpel. We welcome the overriding conclusion that government and policymakers should be driving forward reform.
"This should put a renewed focus on the ongoing pan-industry work being led by the IPO, and ensure that this activity delivers tangible changes in areas such as improved remuneration (whether through equitable remuneration, contract adjustment or rights reversion), better transparency and progress on song data to get the right people paid fairly and quickly. If these outcomes fail to materialise, then the MMF, FAC and other creator-led organisations will call on the government to intervene and fulfil their promise of legislative action."
Entertainment Retailers Association (ERA)
“In this substantial and well-researched report the CMA confirms that the advent of music streaming services has been overwhelmingly beneficial for music fans and for the overall UK music ecosystem. Fans have access to a greater range of music than ever before which they can access via a subscription or supported by advertising. Meanwhile streaming is helping more artists and songwriters than ever to reach an audience, royalty rates are up, artist earnings are up, the number of artists earning from their recordings is up and the share of music revenues taken by songwriters is up.
“That does not mean things could not be improved. The CMA points out that the streaming services themselves have not benefited as much as some others. Meanwhile, it also highlights ways in which the streaming market could still work better for the artists and songwriters who actually create the music. That is why ERA remains committed to the process sponsored by the Department for Digital, Culture, Media & Sport and the Intellectual Property Office to address issues such as transparency and metadata. We look forward to continuing to work with our partners across the music industry to resolve these matters.”