The economics of music streaming inquiry

The CMA’s analysis of the competition law question


On 29 November 2022, the Competition and Markets Authority (CMA), published its final report stating that it would not conduct a market investigation into music and streaming. This decision follows the CMA’s market study into music and streaming, which came in the wake of the Digital, Culture, Media and Sport (DCMS) Select Committee’s July 2021 report entitled the “Economics of streaming” (the “DCMS Report”). Although market studies can result in the CMA recommending changes to industry and government, market investigations can have a greater impact, as the CMA is given the legislative power to correct the issues it identifies.


In 2021, the UK Parliament raised concerns about the dominance of the largest global music groups, namely Sony, Warner, and Universal, also known as the ‘majors’. You can read more about this here. This trio dominate the UK’s music streaming market, accounting for around 70% of UK streams, and this dominance has led some campaigners to argue that there are potential competition law issues at play.

Whilst the CMA acknowledged that certain aspects of the industry have the potential to restrict competition, it ultimately concluded that CMA intervention would not effectively redress this. Nevertheless, the CMA recognised the highly concentrated nature of the industry and that the way in which recording and publishing revenues are currently collected is sub-optimal for artists and songwriters.

The major labels enjoy a larger global presence than independent labels, which provides them with a competitive advantage over independent labels in promoting their catalogues and artists internationally. As set out in the written evidence submitted by the Association of Independent Music (AIM): Independent labels are often less able to benefit from large parent company balance sheets or the robust streaming catalogues of recordings and so compete on reputation, expertise and specificity where they cannot write the same size cheques as the biggest players”.

As the majors have a global reach and the backing of large institutional investors, they are better positioned to provide large cash advances, thereby attracting the world’s most successful artists. This can make it difficult for independent labels to not only attract, but also retain artists after they become successful, which in turn may hinder their expansion ambitions. Despite this, the CMA concluded that further intervention would not result in a material increase in revenues for artists, and that there is no evidence of any substantial and sustained excess profits by the majors.

Artist and writer remuneration

In the last decade, technological innovation has significantly disrupted the music industry at every level. From the rise of social media and algorithmic streaming platforms to improved royalty analytics and recording software, it is now far easier for artists to create, record, distribute, and market their music themselves. As a result, there are more artists releasing music than ever before. For example, the number of artists releasing music doubled from 200,000 in 2014 to 400,000 in 2020. However, the music streaming market is dominated by a very small percentage of artists. According to the UK Intellectual Property Office, 75% of streams were attributed to only 1% of artists in 2020, making it very difficult for artists who are not in this upper echelon to make a living from streaming. The CMA’s analysis further evidenced this point, as it found that an artist needs to attain 12 million streams to earn approximately £12,000, and that less than 1% of artists achieve this number. This means that the remaining 99% of artists earn less than £12,000 from streaming per annum. The DCMS Chair, Julian Knight MP, supported this view, stating that “while streaming brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out”

Critics further argue that the majors are suppressing publishing revenues because they are able to keep a bigger share of recordings royalties compared with the royalties for the underlying composition received by their publishing subsidiaries. They argue that the majors are; therefore, incentivised to reduce their subsidiaries’ publishing revenues to the benefit of the recording side of their business.

The CMA disagreed with this argument, stating that “the share of revenues going to publishers increased from 8% in 2008 to approximately 12% in 2012″. This has since increased to 15% in 2021, marking a doubling in publishing’s share of the pie since 2007. In addition, the growth in the majors’ publishing streaming revenue has increased by 244% since 2017 compared with 121% growth for majors’ recording streaming revenue. The CMA stated that this demonstrates that the majors have not colluded to suppress publishing revenue in favour of increased revenues from recordings.

The CMA noted that the competition to sign artists can be very intense. Overall, the evidence available to the CMA did not show that this concentration in the market is causing consumers harm or that it is driving the concerns raised by artists, namely those relating to unfair compensation. The CMA further noted that neither labels nor streaming services appear to be making sustained excess profits, on the contrary, they are often operating in low or negative profit margins.

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