UK’s Competition and Markets Authority Finds No Case for Action Against Music-Streaming Services
Nine months after announcing a market study into music-streaming services, the UK’s Competition and Markets Authority (CMA) has concluded that there is no case to answer – at least, not yet. The CMA already had its plate full with investigations into Facebook’s Giphy purchase, Google’s adtech stack, and potential antitrust action against Apple and Google’s mobile duopoly.
Background
The CMA was tasked by a parliamentary committee with researching the state-of-play in terms of competition between music-streaming players and their relationships with the so-called ‘big 3’ major record labels. The study aimed to determine whether these practices negatively impacted consumers. In its preliminary market study report, published today, the CMA acknowledges that the music-streaming market is dominated by a few companies.
Market Concentration
The report notes that Spotify has a significant share of the market, estimated at 50%. Collectively, Spotify, Amazon, Google, and Apple account for 95%-100% of music-streaming revenues in the UK. Furthermore, the three major record labels – Sony, Warner, and Universal – accounted for more than 70% of all streams in the UK last year.
Competition Concerns
However, the CMA saw no evidence that this concentration among a few labels and music-streaming platforms was ‘currently causing consumers harm.’ The report notes that there is no clear link between market concentration and sustained excessive profits. In short, the CMA stated that issues raised by artists – such as poor compensation – were not related to competition.
Artists’ Concerns
While many artists have expressed concerns about poor compensation, the CMA’s CEO Sarah Cardell emphasized that technology has opened doors for new artists to find audiences and access a vast array of music. However, she acknowledged that many artists still face significant challenges in getting fair deals. The CMA’s initial analysis suggests that artist outcomes are not driven by issues related to competition.
Next Steps
Today’s announcement is not the CMA’s final decision. The authority has already conducted an in-depth study and will consider feedback from various stakeholders before making its final report. The deadline for responses is August 19, and it would likely take significant new information for the CMA to reverse its decision. The final market study report is expected on January 26, 2023.
Industry Insights
The music-streaming industry has faced criticism over issues such as poor compensation for artists and unfair business practices. While some argue that concentration among a few major players stifles competition and leads to higher prices, others claim that technology has democratized access to music and opened new opportunities for artists.
Regulatory Environment
The CMA’s decision not to take action against music-streaming services may be seen as a welcome development by companies such as Spotify and Apple Music. However, it also raises questions about the regulatory environment for the music industry. As the UK continues to grapple with the implications of technological disruption on traditional industries, the CMA’s report highlights the need for ongoing scrutiny.
Key Players
- Spotify: Dominant player in the UK music-streaming market
- Amazon Music: Significant presence in the UK market
- Google Play Music: Collectively with Apple Music, accounts for 95%-100% of music-streaming revenues
- Apple Music: Major player in the UK market
- Sony, Warner, and Universal: Major record labels accounting for over 70% of all streams in the UK
Market Structure
The report notes that the music-streaming market is characterized by a few dominant players. While this concentration raises concerns about competition, the CMA’s analysis suggests that these issues are not currently causing harm to consumers.
Regulatory Action
While today’s announcement may be seen as a relief for companies such as Spotify and Apple Music, it also highlights the need for ongoing regulatory scrutiny of the music industry. As technology continues to disrupt traditional industries, regulators will play an increasingly important role in ensuring that markets remain competitive and fair.
Conclusion
The CMA’s preliminary market study report provides valuable insights into the state-of-play in the UK music-streaming market. While some may view the authority’s decision not to take action as a victory for companies like Spotify and Apple Music, it also raises questions about the regulatory environment for the music industry. As the UK continues to navigate the implications of technological disruption on traditional industries, ongoing scrutiny will be essential to ensuring that markets remain competitive and fair.
Sources:
- Competition and Markets Authority (CMA) – Preliminary market study report
- BBC News – "Spotify and Apple Music accused of stifling competition"
- The Guardian – "Music streaming: the industry’s dirty secrets"
