UK Competition and Markets Authority (CMA)has said that the dominance of major labels in the streaming business is not holding artists back and that the market is “balanced”, offering good results for consumers.
However, the regulator cautioned that it would be concerned if the top three record labels or music streaming services began to make “sustained and substantial excessive profits”, or if future acquisitions and mergers significantly reduce competition.
The 97-page interim report shows that streaming has changed the industry, allowing more artists to find audiences than ever before, but that the market remains challenging for many creators. With only a minority able to earn a substantial income.
According to CMA, in 2021, more than 138 billion music tracks were streamed in the UK, but less than 1% of all artists receive more than a million streams per month.
It reports that one million streams will net an artist around $1,200 after a record company and streaming service take their share of royalties.
In response to its initial findings, the CMA said it is not proposing to launch a full market investigation of the UK streaming business over competition concerns. “For many artists it is as tough as ever, and many feel that they are not getting a fair deal,” he said. Sarah Cardell, Interim Executive Director of CMA.
Cardell said that Watchdog’s preliminary analysis suggests that “artist results are not driven by competition-related issues” but are due to a massive increase in artists releasing music, as well as the vast catalog available by streaming.
The regulator said that the scale of big companies And their global reach means they can offer great strides in attracting artists, making it harder for independent labels to compete and creating barriers to expansion.
While competition for signing artists remains intense, CMA says traditional record deals are facing increasing disruption from alternative distribution models such as artist and record label service deals.
The CMA says that research indicates that today’s new artists are more likely to be offered higher royalty rates and lower contract terms than in the past as a result of a competitive market.
“While corporate profits have been rising since piracy has been reduced, current evidence does not suggest that market concentration is allowing large companies to generate sustained and substantial additional profits,” the report said.
In the UK, the Big Three (Universal Music Group, Sony Music Entertainment and Warner Music GroupAccording to the Association of Independent Music (AIM), recorded music accounts for 75% of the market, while independents account for the remaining 25%.
CMA’s interim findings will be a welcome addition to label owners who have faced continued pressure from authorities United KingdomDriven by artist dissatisfaction over poor returns from streaming music.
Last July, a nine-month investigation of the music streaming business Committee on Digital, Media, Culture and Sport (DCMS) concluded that the recorded music market is being “distorted” by the major market share enjoyed by major labels.
Since then, the proposed law requires the industry to pay musicians and songwriters, a substantial portion of streaming revenue. ParliamentBut did not find enough support to continue.
In response to potential competition concerns arising from licensing agreements between major labels and music streaming services, CMA He said his research had identified several clauses “that may have the effect of protecting the position of large companies” not typically found in agreements made by independents.
In some cases, there are obligations on streaming services to ensure that the majority of tracks in global playlists roughly correspond to their overall streaming share. However, the CMA said it had found no evidence of “the ability to influence streaming services to decide which music to include in playlists” and that major labels have no access to streaming. The algorithm has no insight or input into streaming services.
