Music streaming market study: from Studio to Stream

The market study will take place in parallel with the ongoing work by the CMA, and Digital Markets Unit (DMU), aimed at fostering effective competition in digital markets.

Background

The announcement follows the CMA’s previous statement of its intention to examine the sector back in October 2021 following a report by the Digital, Culture, Media and Sport Committee on the economics of streaming (see our update here).

The CMA notes that the music industry has “evolved almost beyond recognition”[2]. In the UK, more than 80% of recorded music is now listened to via streaming. Some concerns have been raised by stakeholders that competition may not be working as well as it could be in the market.

Through the means of a market study, the CMA will identify any deficiencies and, if necessary, propose solutions on how the market can be improved. It is common for the CMA to launch investigations on the back of the information gathered through a market study and/or ultimately a market investigation if it suspects that competition law has been infringed.

The assessment of market power within music companies and music streaming services will also feed into the work of the DMU, and we anticipate it will assist in the identification of companies with “strategic market status” in the music and streaming services industry.

The Scope

In its statement of scope, the CMA is proposing to examine the music streaming market, from creator to consumer. It will distinguish between two key levels of the “music streaming value chain”:

(a) The products and services offered by music companies upstream including in recorded music and music publishing; and

(b) The downstream provision of music streaming services.[3]

The objective will be to understand whether the markets are working well and in the interest of consumers. Whether any lack of competition between music companies could affect the musicians, singers and songwriters whose interests are intertwined with those of music fans will also be considered.[4]

The Assessment

The CMA is proposing to undertake the market study in two parts:[5]

(a) Understanding how the industry works and ongoing sector developments, including:

• How music companies and music streaming services generate revenues;
• The market structure since the introduction of music streaming;
• Consumer and creator behaviour; and
• The nature of competition.

(b) Assessing whether there are any specific competition and/or consumer concerns in relation to:

• Competition between music companies, including the extent of any market power;[6]
• Competition between music streaming services, including the extent of any market power;[7] and
• Competition issues that may arise from agreements and interrelationships between music companies and music streaming services.[8]

Possible other harms which will be considered comprise of transparency around how playlists are compiled, music recommendations made to consumers, and the collection and use of consumer data.[9]

Next steps

The CMA is inviting comments on the questions set out in the statement of scope by 17 February 2022. and anticipates music creators, music companies, music streaming service providers, industry bodies, regulators and consumer groups will want to provide input into the scope of the study.

The CMA has six months to decide whether to make a market investigation reference. It will also publish its market study report setting out its findings and any action which it proposes to take in relation to that matter no later than 26 January 2023.

For more information, please contact Amy Donlevey, Ariane Le Strat, Saskia King

[1] Marketing study notice (publishing.service.gov.uk)

[2] CMA plans probe into music streaming market - GOV.UK (www.gov.uk)

[3] Statement of Scope Page 28 Para 83

[4] CMA launches probe into music streaming market - GOV.UK (www.gov.uk)

[5] Statement of Scope Page 28 Para 86

[6] Statement of Scope Page 30 Para 90

[7] Statement of Scope Page 32 Para 96

[8] Statement of Scope Page 30 Para 89

[9] Statement of Scope Page 34 Para 104