The Digital, Culture, Media and Sport (DCMS) Committee raised concerns about how the dominance of Universal Music, Sony Music and Warner Music was “distorting the market” and that the benefits of the music streaming boom were not being passed on to musicians.
In the U.K., the three majors make up 75% of the recorded music market, with independents accounting for the remaining 25%, according to the Association of Independent Music (AIM). Streaming now accounts for four-fifths (80.6%) of all music consumption in the U.K., according to labels trade body BPI.
“The U.K. 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,” said Coscelli, announcing the probe.
She said a market study will help the CMA understand the “radical” changes the music industry has undergone over the past decade and “build a view as to whether competition in this sector is working well or whether further action needs to be taken.”
CMA market studies examine why particular markets may not be working well for consumers and can take up to 12 months to complete. They can result in a range of outcomes, the strongest being consumer or competition law enforcement action, or making recommendations to the government to change regulations.
Other possible consequences of a market study include the CMA encouraging businesses to self-regulate or the launch of an full market investigation, lasting up to 18 months. The outcome label bosses will most want to receive is a ‘clean bill of health,’ which requires no further scrutiny.
A BPI spokesperson said they welcomed the CMA’s study into music streaming and would engage with the regulator “to inform its work.”
“Concerns around hyper-concentration of power by the majors… and the dynamic between music and technology companies are some of the topics that could well benefit from this CMA market study,” said AIM CEO Paul Pacifico.
The launch of a market study into the streaming sector is the latest in a series of probes that the CMA — which exists independently from the British government and has the power to bring criminal proceedings or to force divestments in instances where businesses are abusing dominant positions – has launched into the music business.
In September, it opened an “in-depth” phase two investigation into Sony’s $430 million acquisition of Kobalt Music Group’s independent distribution and label division AWAL. The CMA also conducted an in-depth 20 month merger investigation into ticketing company Viagogo’s $4 billion acquisition of StubHub.
In that instance, the CMA found that the merger resulted in a “substantial lessening of competition” and ordered Viagogo to offload its StubHub business outside of North America. Viagogo sold the assets to Boston private equity firm Digital Fuel Capital last month for an undisclosed sum.
