Deadline for CMA to publish its market study into music streaming

UK– COMPETITION

The Competition Market Authority ("CMA") has launched a market study into music and streaming services that will focus on potential harm to consumers as well as any lack of competition in the market caused by current practices. The study will consider how the market influences consumers' experience and if innovation is being stifled.

Key date(s)

• 22 September 2021 – Department for Digital, Culture, Media and Sport ("DCMS") publishes its report on the economics of music streaming (the "DCMS Report").
• 27 January 2022 – CMA launches market study into music and streaming services in the UK following calls from DCMS.
• 17 February 2022 – Deadline for responses on the issues raised in the statement of scope.
• 26 July 2022 – Deadline for CMA to publish a decision on whether to make a market investigation reference.
• 26 July 2023 – Deadline for CMA to publish the final market study report.

Status

• On 27 January 2022, the CMA announced that it had launched a market study into music and streaming services. The purpose of the study is to examine the music streaming market from the creator to consumer, with particular attention being paid to the roles played by record labels and music streaming services.
• The launch of this market study is a result of continuous campaigning for legislative intervention to 'fix' the music streaming industry and the CMA's response to the DCMS Report on the economics of music streaming which was published on 22 September 2021. The DCMS Report highlighted areas in need of reform in the music streaming industry, and requested the Government introduce reforms to:
  • address the imbalance between streaming platforms and artists and ensure artists are remunerated in a more equitable way; and
  • introduce greater transparency in the music industry in relation to the exploitation or licensing of artists’ works and the revenue generated as a result.
• The DCMS recommended a market study be undertaken to investigate “the possible market dominance of the major music groups and the potential for contractual agreements between them and the streaming services to stifle innovation in the streaming market“.
• The findings of the study will help to determine whether the lack of competition between music companies could affect musicians, singers and songwriters whose interests are intertwined with music listeners.
• The deadline for the CMA to publish the market study report is 26 July 2023, and before this the CMA will be required to reach a decision as to whether to refer the matter to a more detailed market investigation. The market study report will set out any deficiencies in the market which the CMA has identified and where necessary, propose remedies (including potential legal reform) to improve the market.

 What it hopes to achieve 

• The results of the study will greatly influence the consumers' experience and innovation moving forward in the music industry. Depending on what is discovered by the CMA as well as the Government which is conducting further research as a result of the DCMS Report, a new legal framework for the UK music industry may be introduced. The overall mission of the study is to "further the CMA’s understanding of the markets in scope and to assess whether these markets are working well and in the interests of consumer". The market study will help to determine whether any competition issues within the music industry need to be addressed.

Who does it impact? 

• One of the main focuses of the CMA market study is determining whether there is any potential harm to consumers as a result of practices in the market. If such harm exists, consumers will benefit from whatever measures are put in place to remedy the potential harms.
• The market study will also look to assess whether there is any lack of competition between music companies. Currently, the three largest global music corporations, Sony Music Group, Universal Music Group and Warner Music Group, have a combined market share of approximately 80% for both recorded music and music publishing. The findings of the market study may impact the dominance of these companies and bring about new entrants to the market.
• Additionally, any increased competition (and increased innovation which usually accompanies increased competition) will have a positive impact on musicians, singers and songwriters who may benefit economically if music companies adopt different payment models to remunerate music creators / rights holders.

Key points 

1. Streaming plays a key role in the music industry

• • The way in which music is consumed has changed significantly over the last few years. According to the British Phonographic Industry, in the UK 83% of recorded music is now listened to via streaming. As a result, some concerns have been raised by stakeholders that competition in this space is not working well.

2. Protecting music creators and consumers interests

• • As music streaming is a prominent part of the industry, the CMA intends to assess whether its prominence is harming consumers' and music creators' interests. The interests of music creators and consumers are intertwined and the market study will help to determine how competition in the market serves music creators and how this may affect consumers.

3. Competition issues from agreements and interrelationships between music companies and music streaming services

• • The CMA will examine the relationships and agreements between music streaming services and music companies involved in licensing and distributing music and whether these relationships and agreements could raise competition concerns such as shareholdings in the market. For example, both Sony and Universal have direct shareholdings in Spotify. Such agreements will also be considered in relation to their effect on the supply of music streaming services and the supply of services to music creators.

4. Potential legal reform
   • Depending on the findings of the market study, the CMA could intervene by issuing guidance or launch enforcement action under its antitrust powers. Should the CMA decide to make a market investigation reference, remedies as far-reaching as ordering divestments could be imposed. The market study is also likely to have a broader impact beyond UK given the important role the UK plays in the international music industry.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

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