UK competition authority to conduct study into music streaming

The news follows the UK Parliament’s Digital, Culture, Media and Sport (DCMS) Committee report on the economics of streaming, which proposed a series of recommendations, one of which was that the CMA should decide whether or not to conduct a new market study into streaming.

The CMA announcement was made in a letter by its CEO Andrea Coscelli. ­“On 13 October, the [CMA] board considered initial proposals to carry out a markets project on music streaming,” the letter reads. “They agreed that work in this area aligned with the CMA’s prioritisation principles, and that it supported a strategic goal of the CMA to foster effective competition in digital markets, ensuring they operate in a way that promotes innovation and the consumer interest.

“On this basis, the board agreed that there was merit in taking forward a market study. They also agreed, in the light of the concerns you have collectively expressed, that this work should be prioritised: that is, it should be the next market study that the CMA launches. CMA staff will now prioritise more detailed further work to refine and scope this project. This will again be considered by the board, with a view to formally commencing the market study as soon as practically possible.”

The CMA hopes that its market study will be a key tool to help identify and resolve competition and consumer issues, if any are found. It says the study could lead to several outcomes such as advising the UK government to change regulations or public policy, encouraging businesses in the market to self-regulate, providing a “clean bill of health”, or applying stricter measures like taking consumer or competition law enforcement action against firms or conducting deeper market investigation.

“The UK has a love affair with music and is home to many of the world’s most popular artists,” Coscelli said. “We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers. Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80% 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.”

With regard to the DCMS report, several of the recommendations took aim at labels, most notably an introduction of a broadcast system of equitable remuneration and the right to recapture work and adjust contracts. It also recommended that the CMA intervene in the system of streaming royalty distribution, which is currently set at 55% for labels, 15% for publishers and 30% for streaming services

Separately, the CMA is investigating a number of cases in digital markets including Sony Music‘s $430m acquisition of AWAL in February, which has raised competition concerns, as well as Apple’s AppStore, Facebook’s use of advertising data and Google’s Privacy Sandbox.