The competition watchdog has pushed back against claims that music streaming stifles competition and unfairly impacts artists.
In a paper published this morning, the Competition and Markets Authority (CMA) examined the impact of streaming on the music industry, dismissing concerns that the concentrated market, where the likes of Spotify and Apple Music dominate, is causing harm to consumers and artists.
The watchdog found that users instead benefited in terms of price and diversity of content.
Last year there were over 138 billion music streams in the UK, with the number of artists using streaming services having doubled between 2014 and 2020 – from around 200,000 to 400,000.
In terms of choice, the CMA said the nature of streaming means that listeners are exposed to old and new songs, with 86 per cent of streams in 2021 being music that was over a year old.
While the watchdog also praised the range of options for artists for where to put their music, the CMA said: “As has always been the case, while a small number of high-profile artists enjoy huge financial success, the large majority do not make substantial earnings.”
In fact, CMA analysis found that one million streams per month could earn an artist around £12,000 a year.
Meanwhile, recorded music revenues reached £1.1bn in 2021, with 80 per cent of recorded music now listened to via streaming services.
Despite these figures, the CMA said preliminary findings do not show that this concentrated market is currently causing consumers harm or that it is driving the concerns raised by artists.
It also added that neither the three major labels (Sony, Warner Music and Universal Music) nor streaming big dogs appear to be making sustained excess profits.
Interim CMA chief Sarah Cardell said: “For many artists it is just as tough as it has always been, and many feel that they are not getting a fair deal.
Our initial analysis shows that the outcomes for artists are not driven by issues to do with competition, such as sustained excessive profits.”
Meanwhile, music trade association British Phonographic Industry chief Geoff Taylor said he welcomed the initial findings, stating that they highlighted the competitive nature of the music business.
Last year, Labour MP and DCMS Select Committee Member Kevin Brennan pushed forward a private member’s bill, which looked to redress the balance between the earnings of big streamers and labels versus smaller artists.
Speaking to City A.M. today, Brennan called on labels to take the fresh report as an “opportunity to emphasise that they [labels] are looking to give a better deal to musicians and songwriters,” and not to revert to “complacency”.
The CMA also alluded to this fact, suggesting that matters would be different if the power balance shifted between musicians and streamers.
The competition regulator said it would be concerned if innovation in the sector decreased, or if the balance of power changed, with labels and streaming services making mega profits. However, the exact scope of what this would look like was unclear from the CMA.
The CMA has called for further evidence and feedback to be given on these initial findings by 19 August. These views will inform the final report.