Apple Music, Spotify face UK music streaming market probe

‘Hey Siri, not that track play the other one’ ‘Here’s music from the other ones’.

Close links between the music industry, Spotify and other music streaming services, including Apple Music, are to be probed by the UK Competition and Markets Authority (CMA).

Is this (competition) thing on?

The CMA intends to launch a market study to understand how streaming has changed the music industry and to check that competition in the market is working. The government body is now defining the scope of the study, which it intends to launch “as soon as possible,” it said.

This is important as the BPI (the British recorded music industry’s trade association) says music streaming now accounts for four-fifths (80.6%) of UK music consumption.

(And I can recall when music piracy threatened the whole thing, before Apple introduced iTunes and the music labels got together to build Spotify).

What the regulators say

Andrea Coscelli, Chief Executive of the CMA, said in a press release:

“The UK has a love affair with music and is home to many of the world’s most popular artists. We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers.

“Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80% of all music listened to in this country. A 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.”

Apple makes tools creatives use to do creative things

What’s the background?

The DCMS Select Committee published its report of its inquiry into the Economics of Music Streaming on July 15.

This identified a series of concerns, including the possible market dominance of the major music groups and the potential for contractual agreements between the major music companies and streaming services to stifle innovation in the streaming market.

[Also read: What is the Apple Music Voice Plan?]

One particular concern relates to the low fees musicians yield from music streams.

While most young artists are working side jobs to make a living while creating music, the global recorded music market rose by 7.4 per cent in 2020 to US$21.6 billion.  There were 139 billion audio streams in 2020.

Someone is making money here, and it doesn’t seem to be the acts.

While Apple pays more cash per stream than the others, many artists continue to feel they cannot sustain their art on the money they are making.

That challenge may be compounded by major music labels who all have stakes in music streaming services (particularly Spotify), which may be distorting competition. The inquiry has also raised concerns about a lack of transparency on contractual terms from both music companies and the streaming services that may exacerbate issues around creator remuneration.

What is a market study?

Market studies are intended to explore why particular markets may not be working well for consumers. They may lead to a range of outcomes, including:

• Making recommendations to the Government to change regulations or public policy
• encouraging businesses in the market to self-regulate
• Taking consumer or competition law enforcement action against firms
• Making a reference for a more in-depth (phase 2) market investigation
• Declaring a “clean bill of health”.

What happens next?

This is likely to extend over a year or so. It will be interesting to see if a constructive suggestion emerges from it, but it seems unlikely to be a completely happy tune.

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