In light of recent demands from MPs to “fix streaming”, the Competition and Markets Authority, Britains competition watchdog, has launched a market study to investigate the equity of their business practices. There is growing concern from musicians and fans that streaming services such as Spotify and Soundcloud are not paying their fair share to artists, and that the new era of streaming is ill-equipped to benefit anyone other than massive artists and even bigger record labels. In the words of Julian Knight, the committee chair of the Department for Digital, Culture, Media and Sport, streaming services had “brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out”.
The Competition and Markets Authority, or CMA for short, noted that in the last decade, the music industry had evolved “almost beyond recognition”, not just in the way that listening habits have changed, but also in terms of how profits are now diced up. A report from the Department for Digital, Culture, Media and Sport estimates that streaming services take up to 34% of revenues from a stream, the label recouping 55%, and the rest being split between the artist, songwriter, and publisher, as per the Guardian.
This lack of equity for artists is worrisome as they may feel as if they are losing out on their fair share of profits. To quell these worries, the CMA states that “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”. It will eventually decide whether or not the government should legislate the UK music market, whether the industry is capable of regulating itself, or whether legal action should be taken against firms who are exploiting artists.
With the livelihoods of British musicians being threatened, 44 Conservative MPs have written a letter to Prime Minister Boris Johnson calling for the industry to be legislated, with calls to “fix streaming”. It is in light of these calls that the CMA is investigating streaming services, falling in line with the Conservatives plan to “build back better” from the pandemic and ensure British workers recover from the loss of revenue over 2020.
In a separate investigation, the CMA is looking into Sony’s takeover of AWAL, an artist services company, in a bid worth £312m ($430m), according to Music Business Worldwide. The CMA noted that if the deal had not gone ahead, that AWAL would have grown to be a competitor of Sony, implying that swallowing up competition in lucrative takeover bids is an anti-competitive business practice. Additionally, AWAL provided higher revenues for streams than Sony, as well as allowing greater ownership of artists over their music. It is thus concerning to see music industry giants block like Spotify and Sony to close paths to smaller artists, and only allowing the biggest superstars to see considerable profits.
