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Study: Music streaming competition benefits consumers

November 29, 2022

By Colin Mann

The UK’s Competition and Markets Authority (CMA) has published its final report following its independent study into the music streaming market and found that consumers have benefited from digitisation and competition between music streaming services.

Prices for consumers have fallen by more than 20 per cent in real terms between 2009 and 2021 – with many services also offering music streaming for free with ads. The study found that there were around 39 million monthly listeners in the UK, streaming 138 billion times a year.

The CMA also heard concerns from creators – artists and songwriters – about how much they earn from streaming. With an increasing number of artists, tracks and streams, the money from streaming is shared more widely – with those that have the highest number of streams earning the most. The CMA found that over 60 per cent of streams were of music recorded by only the top 0.4 per cent of artists.

The CMA found that the concerns raised by artists are not being driven by the level of concentration of the recording market. Analysis found that neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators. Consequently, the issues concerning creators would not be addressed by measures intended to improve competition, but instead would need other policy measures in order to be addressed.

Digitisation has led to a major increase in the amount of music people have access to and to large increases in the number of artists releasing music (up from 200,000 in 2014 to 400,000 in 2020) partly by opening up new direct routes to listeners. This has also meant that there is greater competition to reach listeners and for the associated streaming revenues. The study found that an artist could expect to earn around £12,000 (€13,900) from 12 million streams in the UK in 2021, but less than 1 per cent of artists achieve that level of streams.

Some 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. Whilst individual deals can vary considerably, the report highlighted on average royalty rates in major deals with artists have increased steadily from 19.7 per cent in 2012 to 23.3 per cent in 2021. For songwriters, the share of revenues going to publishing rights has increased significantly from 8 per cent in 2008 to 15 per cent in 2021.

While the CMA understands the concerns from creators about the level of income many receive, the analysis in the study suggests it is unlikely that an intervention by the CMA would release additional money into the system to pay creators more.

The study does however highlight that the issues raised by creators could be further considered by government and policymakers as part of their ongoing work following the DCMS Select Committee’s inquiry into the economics of music streaming.

“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,” notes Sarah Cardell, Interim CEO of the CMA. “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.”

According to Nick Eziefula, Partner at specialist media & entertainment law firm, Simkins LLP, the CMA’s final report on music streaming will be celebrated by labels and criticised by creatives. “It is, however, important to note that the CMA’s focus in this report was largely on competition law concerns, rather than wider issues of fairness. The CMA’s reluctance to pursue a further investigation in such circumstances is unsurprising given that its remit is primarily to protect consumers’ interests,” he adds.

“Many of the most contentious issues in relation to the streaming model relate to the distribution of revenue collected from consumers. The CMA has made clear its view that it is for Government and policymakers to consider whether to investigate the fairness of such allocation, and whether any wider policy intervention is required. Therefore, whilst the report is an interesting and important development in the streaming debate, it should not be misread as a conclusive assessment of the overall fairness of streaming” he concludes.

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