The UK competition watchdog notes that major record labels “do not make significant excess profits to share with creators”.

It was an investigation into the music business that rocked the major record labels for a good moment. But in the end, after a thorough investigation of the local music market, Britain’s leading competition watchdog decided closed that big record companies[not] probably manufacturing significant excess profits which could be shared with the creators”.

In July last year, a parliamentary committee of UK politicians called for a “full reset” of music streaming after examining the economics of streaming.

A related report recommended that the majors’ dominance of the UK recorded music industry be referred to the UK’s competition watchdog – the Competitions and Markets Authority (CMA).

The CMA then launched a “market study” into the power dynamics of the record business. The finals of the CMA 165-page report on the subject was published in the UK on Tuesday (November 29).

During the CMA market study, some lobbyists in the UK music industry suggested that artists and songwriters are not making enough money from streaming services and accused certain music companies of clinging to outsized royalties.

The CMA eventually concluded that getting paid from streaming is an elite pursuit, with over 60% of streams in the UK being music recorded by only the top 0.4% of artists.

The CMA study also concluded that music consumers have benefited from “real” price reductions on music streaming services. Due to inflation, the unchanged price consumers in the UK pay for a service like Spotify Premium fell by more than 20% between 2009 and 2021, according to the CMA.

Specifically on the subject of major-label profits, the CMA states in its new report that it conducted a profitability analysis and “found no evidence of significant and sustained major-label excess profits that could be competed away, to the benefit of consumers, for example, from greater investment in music.”

It adds, “While there are limitations to the profitability analysis, the results of this analysis are consistent with our overall finding that competition elsewhere in the value chain helps ensure positive outcomes for consumers.”

In the report’s concluding remarks, the CMA comments on the impact streaming has had on the music industry, noting that “the music market has seen profound changes in recent years from piracy to the introduction of streaming.”

It also says that “it is widely recognized that consumers have benefited from streaming through access to full music catalogs and innovative services for free, or at a fixed monthly price that has come down in real terms.”

However, the CMA believes that “there are real questions as to whether the creators – those who write and perform the songs – have benefited to the same extent”.

“There are more artists than ever before, and as a result, creators are faced with more artists and songs to compete with for streaming revenue.”

CMA report

The report goes on to note that while “results are generally improving, we find that changes in the industry driven by streaming have, to some extent, made things harder for some developers.”

Factors that have made it difficult for some creators include, according to the CMA, “lower barriers to entry and more choice in distributing music,” meaning that “there are more artists out there than ever, and therefore creators are faced with more artists, and songs, with.” where you can compete for streaming revenue.”

The CMA’s particular observation – that there are more artists and more songs than ever before – is even more true after it was revealed that around 100,000 tracks are uploaded to music streaming services every day.

Other challenges artists face in today’s streaming economy, as described by the CMA, include “knowing which of the growing pool of creators will be successful is a challenge for music companies.”

The CMA adds that “this inherent uncertainty, coupled with consumer tastes tending to focus on a relatively small number of artists, means creators face even greater challenges.”

However, she concludes that she “does not believe these factors are caused or exacerbated by issues related to how companies compete in the marketplace.”

“We’ve heard from many artists and songwriters across the UK about how they struggle to make a decent living from these services. Those are understandable concerns, but our findings show they are not the result of ineffective competition — and intervention by the CMA would not free up more money into the system to help artists or songwriters.”

Sarah Cardell, the CMA

Announcing the final report on Tuesday (November 29), Sarah Cardell, interim CEO of the CMA, said, “Streaming has transformed the way music fans access vast catalogs of music and provides artists with a valuable platform to reach new listeners quickly and.” at the same time price for consumers, which has fallen in real terms over the years.

“However, we have heard from many artists and songwriters across the UK how difficult it is for them to make a decent living from these services. These are understandable concerns, but our findings show that they are not the result of ineffective competition – and intervention by the CMA would not free up more money into the system to help artists or songwriters.

“Although this report marks the end of the CMA’s market study, which addresses the competition concerns previously expressed, we also hope that the detailed and evidence-based picture we have been able to create of this relatively new sector will provide a basis for policy.” used by decision makers to assess whether additional measures are needed to help creators.”

Some other key conclusions from the report are:

About the power of the majors:

“We have been charged that the CMA could break up the majors, interfere with historic artist-label contracts, put up firewalls between the majors’ publishing and recording arms, remove clauses in contracts between streaming services and labels, and impose a code of conduct that regulate the financial relationships between music companies and authors, or otherwise intervene to increase author remuneration. Overall, we have not identified any significant competition concerns, particularly those that are likely to result in significant excess profits.

“This means that competitive intervention is unlikely to free up more money from the system that could significantly improve overall results. In such circumstances, there is also a greater risk that competition interference will have unintended consequences for both consumers and creators.”

“For example, an intervention to separate the majors’ publishing and record businesses could incentivize standalone record companies to refuse to offset an increase in ‘publisher’ share with a decrease in record share, as this creates losses in their recorded revenue, not profits on theirs Publication share would be mitigated.

“Furthermore, the intervention is unlikely to materially shift the split between recording and publishing, as these could be due to frictions in licensing negotiations and the bargaining power of rightsholders inherent in the market, for the reasons we set out in the report and cannot be overcome by more intense competition for songwriters.”

About Earnings on Music Streaming Services:

“We also have not found any evidence of streaming services making excessive profits at this time — we do find low or negative operating margins for the music streaming services whose accounts we have been able to analyze.” This proof of profitability is consistent with the intense competition between music streaming services in providing services to consumers.

“#Broken Record Campaign and a record label have expressed concern that music streaming services may not generate excessive profits (particularly Spotify’s entry into new formats such as podcasts and audiobooks) due to investments in unrelated services that are cross-subsidised by music streaming. . .

“Investments in other content formats could partially explain the lower margins of music streaming services. However, investments by music streaming services to expand the content offering of a music streaming service also come with strong competition. Additionally, offering new bundles of audio formats can also serve to expand the market of those attracted to music streaming services, and we find that streaming services expect these additional services to be viable over time will.”

On the chances of future interventions:

“The music streaming market is changing rapidly, and further technological advances in the coming years could lead to further changes in the way we listen to music.

“During our study, we noted the significant innovations introduced in streaming services and that there are now new ways to access music, such as through UUC platforms, with resulting new opportunities for revenue growth.

“It is likely that these changes will continue to raise questions about how these developments will affect consumers and creators. In the future, the CMA can intervene if market changes restrict or distort competition and harm consumer interests.”music business worldwide The UK competition watchdog notes that major record labels “do not make significant excess profits to share with creators”.

Russell Falcon is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button