The competition watchdog will launch a review of the UK music market to address concerns about the power of big music labels and whether money is flowing from streaming platforms down to the artist.
The market study, which was prompted by a UK government recommendation last month, follows a parliamentary inquiry into the music streaming industry following longstanding complaints from musicians and songwriters about the pitiful amount of money they receive from platforms such as Spotify.
The Competition and Markets Authority said it would formally begin the review as soon as possible. The findings could result in a full investigation and recommendations to the government to legislate for changes to improve how the music market functions.
The watchdog is already investigating the impact of Sony Music’s takeover of two businesses from independent music company Kobalt.
The Digital, Culture, Media and Sport (DCMS) committee, the parliamentary group that looked into the industry, raised concerns over the dominance of big music labels, including Universal Music, Warner Music and Sony Music, which MPs said have an “unassailable position” in the market.
Julian Knight, chair of the DCMS committee, said evidence had been presented to the government over concerns about the power of big music companies, which have a combined market share of almost 70 per cent, according to industry data.
Labels have argued that competition remains fierce in the UK music industry, which has produced global artists such as Adele, Ed Sheeran and Coldplay, while many smaller British artists are also thriving in the streaming age.
Andrea Coscelli, chief executive of the CMA, said: “Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80 per cent of all music listened to in this country. A market study will help us to understand these radical changes and build a view as to whether competition in this sector is working well or whether further action needs to be taken.”
The rise of streaming services, such as Spotify, YouTube and Deezer, has triggered an international debate over who benefits from the money generated by the boom in digital music.
In the UK, about 80 per cent of music is streamed, which has driven a resurgence in the value of music companies. Universal Music, the world’s largest record label and publishing company, floated last month with a market capitalisation of €45bn.
The greater data transparency offered by digital music sources, compared with tangible sales of CDs and vinyl records in stores, has highlighted the sometimes marginal returns that many artists make.
The DCMS report, published in July, found that between 2015 and 2019, the streaming-led recovery had boosted the turnover of big UK labels by 21 per cent, while operating profit margin increased from 8.7 per cent to 11.8 per cent.
However, it also argued that artists had largely not benefited from the profits with 82 per cent of professional musicians making less than £200 from streaming in 2019, according to the MPs’ report.
A report from UK Music, the trade body, this week showed the importance of streaming revenue to musicians during the pandemic. In 2020, one in three jobs in the music industry were lost due to the shutdown of live events and recording studios which had a knock-on effect for the wider economy as the industry’s contribution to gross domestic product dropped 46 per cent to £3.1bn.