UK Watchdog decides not to investigate music industry
Last year, following extensive government analysis, the UK’s Competition and Markets Authority (CMA) unveiled plans for an “investigation into music streaming”. Now, six months into the study, the CMA has revealed that it has no plans to launch a broader market survey of the music industry.
The Competition and Markets Authority recently detailed the decision not to pursue a full-scale investigation into streaming and the contemporary music industry. In short, regarding the background of the case, a British parliamentary committee carried out its own high-profile investigation between 2020 and 2021.
Said investigation officially concluded with a final report in July 2021, and among other things, the 115-page document called for a “complete reset” of the streaming space. Predictably, the multi-faceted breakdown and its recommendations, along with support for reform from high-profile artists, laid the groundwork for the music industry investigation originally cited by the report. ‘AMC.
Despite investigation by several independent organizations and companies, the CMA has chosen not to refer to a market investigation into “the provision of music to consumers or the provision of services related to the provision of music to consumers”, as stated on The Beginning.
The CMA – which in February approved Sony Music‘s takeover of AWAL – explained the controversial decision in a ‘market research update’, which spans a staggering 97 pages even after its authors made a number of deletions from the public version. Additionally, “update” is an important descriptor, as the CMA has signaled that it will release a “full report” by January 26, 2023.
But the detailed “market research update” already covers everything from a high-level overview of industry structure (including the role of majors, recorded music versus publishing , and much more) to the nature of the agreements with the main streaming platforms.
Of course, the voluminous document identifies several interesting figures, such as the CMA’s estimate, based on “data from the majors”, that one million monthly streams will net an artist a paycheck of £1,000 (currently $1,202.90) – or just $0.0012 per coin. Notably, “the analysis does not include revenue from overseas or other sources such as live performances or publishing rights,” according to the report.
Similarly, “Google estimated that it pays approximately [55-60]% of advertising revenue generated by streaming music on its YouTube UUC [user-uploaded content] platform, including for commercial and original music, and sometimes for multiple rights”, the text relays the data provided to the CMA.
Specifically regarding the reasoning behind the AMC’s decision not to conduct a comprehensive survey of the music industry, the government organization said, “Our current view is that the majors’ activities in the music in publishing are unlikely to increase their bargaining position significantly. .
“At present, we have found no evidence of close cooperation or cross-influence on recording and publishing conditions within the majors. … These are largely organized as autonomous entities.
“Given the evidence of positive consumer outcomes, the absence of sustained record label excess profits, and the declining share of streaming music revenue going to rightsholders, our current view is that limited competition in the supply of music to music streaming services is not a significant cause for concern,” the CMA also said.
Finally, for the justification for not investigating, the CMA has “currently found no evidence that streaming services generate excessive profits” and “it is unlikely that it will be possible to improve the results of the artists of material way through increased competition, for example through a less concentrated market structure,” according to the market research update.
The UK recording industry (which ostensibly praised independent professionals in a report last week) responded positively to the CMA’s “welcome” decision. The Association of Independent Music, for its part, said the development “underscores the need for music organizations to work together to achieve positive outcomes for the sector.” And Hipgnosis director Merck Mercuriadis called the decision “regrettable”.