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UK’s competition regulator plans probe into Spotify and other music streaming platforms

Earlier, a government committee had recommended that the UK’s regulator first do a market study which will take a year.

Following discussions within the government about possible practices that stifle innovation in the streaming market, the United Kingdom’s Competition Markets Authority (CMA) will now probe the music streaming market. The music streaming market comprises several major players such as Spotify as well as Big Tech verticals like Apple Music, Amazon Music, etc.

The CMA plans to carry out a market study before formally launching the probe, said the regulator in a press release.

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 — Andrea Cosocelli, Chief Executive of the CMA.

In a letter to the UK government’s Digital Culture Media and Sport Committee (DCMS), the CMA outlined its intended next steps —

On October 13, the Board considered initial proposals to carry out a markets project on music streaming. They agreed that work in this area aligned with the CMA’s prioritisation principles, and that it supported a strategic goal of the CMA to foster effective competition in digital markets, ensuring they operate in a way that promotes innovation and the consumer interest. On this basis, the Board agreed that there was merit in taking forward a market study — the CMA said in its letter to the UK government

What are the concerns

On July 15, the DCMS Select Committee published a report on its enquiry into the Economics of Music Streaming. It identified a series of concerns including —

  • Possible market dominance of major music groups
  • Potential for contractual agreements between the major music companies and streaming services
  • Certain issues which are resulting in low remuneration to musicians and performers
  • Lack of transparency on contractual terms from both music companies and streaming services

The Committee heard from a number of artists who think they are not receiving a fair share of revenues from streaming, compared to record labels and streaming platforms. The Committee also commented on the position of the three major music companies, which may cover up to 75 percent of the UK recording market. They questioned whether this, together with the major labels’ publishing operations and equity stakes in streaming services like Spotify, was distorting competition in the recorded music market — Letter to DCMS to the CMA

The committee also proposed broad range of legislative and regulatory interventions, including on copyright and the remuneration of artists. “It also recommended that CMA conducts a market study into some of the concerns raised in the enquiry,” the letter from DCMS to the CMA said.

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How will a market study help

The Competition and Markets Authority (CMA) said —

  • A market study can take up to one year to complete: “It allows the CMA to gather information to understand a market; but it does not give the CMA powers directly to address the problems in that market,” the CMA said. The CMA would be dependent on government, and potentially other stakeholders, accepting and implementing any recommendations.
  • A market investigation is led by a group of independent panel members: It lasts up to 18 months, after which legally binding remedies can be imposed on market participants to address any competition problems that have been identified, the CMA said.

‘In India, music streaming services pay 10–18 paise per stream to labels’

In an interview with MediaNama last year, Tips Music’s Managing Director Kumar Taurani said, “The industry norm [for royalty payments from streaming services to music labels] is Rs 0.10–0.15 per stream. That varies company to company, sometimes it’s Rs 0.10, sometimes Rs 0.12 or Rs 0.15; once it even went up to Rs 0.18, I heard.”

This was among the first clear indications of how much money exchanges hands between music streaming services and record labels for such deals. You can read the full interview here.

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Among other subjects, I cover the increasing usage of emerging technologies, especially for surveillance in India

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