The competition watchdog will launch a review of the UK music market to address concerns about the power of major music labels and whether money is flowing from streaming platforms to the artist.
The market research, which was prompted by a recommendation from the UK government last month, follows a parliamentary inquiry into the music streaming industry following long-standing complaints from musicians and songwriters about the pitiful amount they get from platforms like Spotify.
The Competition and Markets Authority said it would officially begin the review as soon as possible. The results could lead to a full investigation and recommendations to the government to legislate on changes to improve the functioning of the music market.
The watchdog is already investigating the impact of Sony Music’s takeover of two businesses from independent music company Kobalt.
The Digital, Culture, Media and Sport Committee (DCMS), the parliamentary group that has looked into the industry, has expressed concerns about the dominance of major music labels, including Universal Music, Warner Music and Sony Music , which MEPs say have an “unassailable position” in the market.
Julian Knight, chairman of the DCMS committee, said evidence has been presented to the government regarding concerns about the power of large music companies, which hold a combined market share of almost 70%, according to industry data. .
The labels have argued that competition remains fierce in the UK music industry, which has produced global artists such as Adele, Ed Sheeran and Coldplay, while many smaller UK artists are also thriving in the streaming age.
Andrea Coscelli, Director General of CMA, said: âOver the past decade, the music industry has evolved in almost unrecognizable ways, with streaming now accounting for over 80% of all music listened to in this country. Market research will help us understand these sweeping changes and determine whether competition in this industry is working well or whether further action needs to be taken.
The rise of streaming services, such as Spotify, YouTube, and Deezer, has sparked an international debate about who will benefit from the money generated by the rise of digital music.
In the UK, around 80% of music is streamed, which has led to a resurgence in the value of music companies. Universal Music, the world’s largest label and publisher, launched last month with a market capitalization of 45 billion euros.
The greater data transparency offered by digital music sources, compared to tangible sales of CDs and vinyl records in stores, has highlighted the sometimes marginal returns of many artists.
The DCMS report, released in July, found that between 2015 and 2019, the streaming-induced recovery had increased the turnover of major UK labels by 21%, while the operating profit margin fell from 8%. , 7% to 11.8%.
However, he also argued that artists had largely failed to take advantage of the profits with 82% of professional musicians earning less than Â£ 200 from streaming in 2019, according to the MPs report.
A report from UK Music, the professional body, this week showed the importance of streaming revenue for musicians during the pandemic. In 2020, one in three jobs in the music industry was lost due to the closure of live events and recording studios, which had a ripple effect across the entire economy, as the industry’s contribution to gross domestic product fell 46% to Â£ 3.1 billion. .