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Mixed response from music industry to CMA’s decision on streaming investigation

By | Published on Wednesday 27 July 2022

Competition And Markets Authority

Organisations from across the music industry yesterday responded to the news that the UK’s Competition & Markets Authority is not planning on launching a full investigation into the music streaming market. Those representing record labels, music publishers and the streaming services generally welcomed that decision, while those speaking for artists, musicians, songwriters and managers were less impressed.

The CMA instigated a market study into music streaming last year following the UK Parliament’s inquiry into the economics of streaming. As the UK’s competition regulator, the CMA was tasked with considering whether the major music rights companies being so dominant in both songs and recordings, or having such a small number of digital companies dominating music streaming, or any of the practices of those companies, posed competition law concerns.

Among other things, the regulator was looking into the allegation that the majors being dominant in both songs and recordings has resulted in more streaming money flowing to the latter than the former, because generally the majors get to keep a bigger share of recordings income. As for the dominance of the streaming services, concern has been raised regarding their power to push music at people via their often mysterious algorithms and playlisting operations.

If the CMA felt its market study raised legitimate competition law concerns, the regulator could have instigated a full-on investigation into the sector, which would have been much more rigorous, and could have ultimately intervened in the market place in some way. However, in an update on its market study yesterday, the CMA said it was not inclined to launch any such investigation.

Generally the record labels, music publishers and streaming services were opposed to a big old investigation being launched. They would mainly argue that, when it comes to consumers accessing music, basically music fans have never had it so good. And while, for the music community, it’s as challenging as ever to pursue a career as a music-maker, artists and songwriters have much more choice today when it comes to choosing business partners like labels and publishers, with lots of new kinds of deals available that are much more favourable to the music-makers.

However, while artists, writers and managers would agree with much of that, they’d also counter that there are a number of issues with the way music streaming currently works, at least some of which are the result of certain big players in the market being so dominant. Plus, while new artists might have more choice in choosing their business partners, those artists still stuck in old life-of-copyright deals from the pre-digital age have no choice at all when it comes to who exploits their work.

Reps for the artist, writer and management communities had various criticisms of the CMA’s decision yesterday. Some argued that the regulator had focused much more on the marketplace of music fans seeking to access music, rather than the marketplace of music-makers seeking to access services from the music industry, and most of the issues are in the latter domain.

Others reckoned that the stats-filled report that the CMA published alongside its preliminary decision actually proved their criticisms regarding the dominance of the majors and the big streaming services, and the impact that has on how music is licensed to services and recommended to users. And, as a result, it’s perplexing as well as disappointing that the CMA isn’t inclined to go the full investigation route.

All that said, the CMA’s market study was just one of the initiatives launched in the wake of the parliamentary inquiry into streaming, with the UK’s Intellectual Property Office also currently running research into and discussions around fair remuneration, transparency and data.

And the CMA’s update did acknowledge some of the issues that have been raised by music-makers – especially around transparency – but seemed to conclude that these were not competition law issues, and therefore should be dealt with by the IPO’s work, not a CMA investigation.

The IPO’s work is very much ongoing, and may well be further informed by the lengthy report the CMA published yesterday. Plus, the CMA’s study is still ongoing too, with further consultation due to take place before any final decisions are made.

Which means that – while many in the artist, writer and management communities were disappointed by the CMA’s announcement yesterday – their trade groups were keen to stress that they remain optimistic many of the issues raised about streaming can still be addressed.

And now, here are lots of people commenting on the CMA’s announcement – starting with the positive reactions, and then moving onto the critics. And finishing off with Hipgnosis founder Merck Mercuriadis, who has been particularly vocal about the impact of the dominance of the majors on the song royalty rate. There’s a special prize if you read them all.

Geoff Taylor, CEO of record label trade group BPI: “We welcome the CMA’s preliminary findings, which have concluded that the streaming market is competitive, providing artists with more ways to release their music, and fans with more choice and value than ever before”.

“We and our many and varied record label members are focused on investing in British artists, building their global fanbases, and sustaining the continued success of British music. We will continue to engage with the CMA and government to help ensure that the streaming market works to the benefit of artists, songwriters, record companies and fans”.

Paul Pacifico, CEO of the Association Of Independent Music: “We welcome the CMA’s update report which reinforces what we know – that building success in music is hard – and underlines the need for organisations across music to work together to secure positive outcomes for the sector. Ultimately, AIM’s community of creative entrepreneurs want to be assured they are fighting a fair fight, and we will continue to work across industry and government to help ensure UK music remains world-leading”.

Paul Clements, CEO of the Music Publishers Association: “MPA welcomes the CMA interim report on the music streaming market, affirming that the common purpose of all music publishers is to champion songwriters and composers. We are a community; focused on transparency and always achieving more for our creators”.

ERA, which represents the streaming services: “ERA welcomes the update paper [from the] CMA on its market study into music and streaming. The report vindicates ERA’s view that the investment and innovation of music streaming platforms has been overwhelmingly positive for consumers as well as for the music industry. Thanks to streaming services, consumers have greater access to a greater variety of music than ever before and an array of price and service propositions”.

“Meanwhile, for the recorded music industry, streaming services have rescued a sector that had been shrinking rapidly due to piracy and have delivered over £5 billion of new revenue in the UK alone. Recent forecasts from Goldman Sachs and the consultancy MIDIA suggest that UK streaming revenues will grow by a further 70%-100% by 2030 with the vast majority of that digital dividend flowing to the music industry”.

“ERA and its members will continue to assist the CMA in its enquiries ahead of the publication of its final report in January 2023. Meanwhile, ERA welcomes the progress which has already been made in the parallel process initiated by the Department For Digital, Culture, Media & Sport and the Intellectual Property Office and pledges its commitment to do what it can to improve transparency, data standards and data quality to speed the flow of money to artists and songwriters”.

Kim Bayley, CEO of ERA: “The transformation and return to health of the music industry through streaming is an incredible success story, driven by the innovation and investment of streaming platforms. We need to continue to build on that success and ensure that the market works for everyone involved”.

Annabella Coldrick and David Martin, CEOs of the Music Managers Forum and the Featured Artists Coalition:“By their own admission, this initial report from the CMA is primarily focussed on consumers. In that context, we agree that streaming has been hugely positive. The recorded market is booming, and music fans have never had such choice and access to music”.

“But when it comes to the impact on artists, songwriters and the creator community, the findings do not represent reality, particularly in the context of record label profits, which are seeing double digit year-on-year growth. Many of the more complex and contentious issues raised by our members – for instance, around contractual reforms, disparity in negotiating power or the ‘blank cheque’ advances paid to major labels as part of licensing negotiations – are simply not referenced at all”.

“On the face of it, the CMA report is disappointing for music-makers. However, all of these issues remain the subject of intense discussion at the Intellectual Property Office, with a stated commitment to legislate if the industry cannot agree to market reform. It is ultimately this process that will deliver the most tangible results for artists, songwriters and music creators, and the FAC and MMF will be placing full focus on achieving a fairer deal for our members either via these IPO workstreams or through legislative intervention”.

Naomi Pohl, General Secretary at the Musicians’ Union: “It is disappointing that the competition issues we see in the music streaming market, which impact on our members’ earning capacity, will not be explored fully in a CMA investigation. The CMA’s release today highlights what it sees as positive impacts of music streaming, but we feel they have failed to recognise the very serious problems posed to creators”.

“In the long term, this could diminish the diversity of British music available to consumers as musicians are forced to seek other ways to make a living. We had particularly hoped that the CMA would deliver for songwriters who are currently receiving a small share of streaming revenue. Our fight to ‘fix streaming’ will continue, and we are still pushing for legislative reform to guarantee fair payments for our members”.

The Incorporated Society Of Musicians: “We are disappointed that the CMA has today acknowledged that the streaming market is not working as well as it could do, yet is not minded to open a full market investigation. Today’s announcement fails to recognise the power imbalance that exists in the industry between larger labels, streaming services and smaller artists which if left unaddressed has the potential to stifle the innovation and development the sector needs for its sustainability. The ISM will continue to call for fair remuneration from streaming for all artists”.

Tom Gray, founder of the #BrokenRecord campaign and Chair of The Ivors Academy: “Without doubt, the CMA’s decision not to launch a full market investigation is disappointing for songwriters and composers and fails to address the urgent need to fully and properly value the song within streaming”.

“While there have been positive steps to address historic contracts and explore user-centric models, much more needs to be done to put music creators at the heart of music, so they are properly rewarded for their work. It’s a long road to fair and equal treatment and we are committed to working with music creators, the Intellectual Property Office and partners to achieve this”.

Hipgnosis Founder and CEO Merck Mercuriadis: “We would like to thank the CMA for acknowledging in its report today the lack of transparency in the music streaming market, and for highlighting the continued dominance of the market by the major labels and recorded music, along with the severely adverse impact this is having on songwriters’ ability to earn a living”.

“However, with 70% of all those responding to the CMA consultation calling for reform, it is regrettable that the CMA is not minded to investigate and address the clear failures its study identified. The DCMS select committee in its July 2021 report on the economics of music streaming … called for the CMA to address the economic impact of the music majors’ dominance. Today the CMA has not acted to address the impact on the creative songwriting community, and this is a missed opportunity to follow up on those concerns raised by MPs on the DCMS select committee”.

“It is a disappointment for songwriters who earn pitiful returns from streaming, not because there is not enough to go round, but simply because it is not being shared fairly and equitably. Hipgnosis will continue to call for fundamental reform of a broken system which does not recognise the paramount role of the songwriter in the music ecosystem”.

“We have always believed that the ultimate solution lies within the music industry itself and we will continue to advocate on behalf of songwriters with the major recorded music companies to push for a fair and equitable split. There would be no recorded music industry without songwriters”.

“Legislative and government authorities have the power to redress the economic imbalance where major recorded music companies that own and control the major publishing companies are purposefully undervaluing the songwriter’s contribution. The IPO has a key role to play in redressing the imbalance and we will continue to support its work and efforts”.

“Hipgnosis will continue to campaign for change at the highest levels, using our success to advocate and fight on behalf of the songwriting community and to take the songwriter from the bottom of the economic equation to the top”.

Well done, you read them all! What’s the prize that was promised? Well, now you get to read the CMA’s 97 page report! Will the fun never end?