CMA: NO U.K. STREAMING PROBE NECESSARY
The music-streaming marketplace is delivering positive outcomes to consumers, the U.K.’s Competition & Markets Authority has determined, meaning an investigation will not be forthcoming. The CMA is open to receiving feedback over the next four weeks—and received some immediately about continued concern for songwriters.
In its report, the CMA found that while the three major labels play a key role in recorded music, they are not “currently causing consumers harm” or “driving the concerns raised by artists" and concluded, "Overall, the evidence we have seen does not support the allegation that there are restrictions or distortions to competition that are leading the majors to suppress publishing revenues."
The CMA did note that it would be concerned if the market changed in ways that could harm consumer interests: “For example, it would be concerned if innovation in the sector decreased or if the balance of power changed and labels and streaming services began to make sustained and substantial excess profits.”
CMA Interim Chief Executive Sarah Cardell said: “For many artists it is just as tough as it has always been, and many feel that they are not getting a fair deal. Our initial analysis shows that the outcomes for artists are not driven by issues to do with competition, such as sustained excessive profits.”
Merck Mercuriadis, founder and CEO of Hipgnosis Song Management, was among those who found the decision troubling, remarking: “Today the CMA has not acted to address the impact on the creative songwriting community, and this is a missed opportunity to follow up on concerns raised by MPs on the DCMS select committee. It's a disappointment for songwriters, who earn pitiful returns from streaming, not because there is not enough to go round but simply because it is not being shared fairly and equitably. Hipgnosis will continue to call for fundamental reform of a broken system that does not recognize the paramount role of the songwriter in the music ecosystem.”
Outcomes for artists are driven by factors largely unrelated to the high degree of concentration, the CMA decided, stating: “There has been a huge increase in the number of artists sharing their music and a vast back catalog made available via streaming. This, coupled with the fact that there is only a finite amount of music a consumer can listen to and a relatively fixed pot of revenue from streaming, inevitably reduces the amount that most artists can earn, even with increased royalty rates. While the majors’ profits have been increasing since the lows of piracy, the current evidence does not suggest that market concentration is allowing the majors to make sustained and substantial excess profits.”
Said BPI Chief Executive Geoff Taylor: “We and our many and varied record-label members are focused on investing in British artists, building their global fan bases and sustaining the continued success of British music. We will continue to engage with the CMA and government to help ensure that the streaming market works to the benefit of artists, songwriters, record companies and fans.”
AIM CEO Paul Pacifico responded: “We welcome the CMA’s update report, which reinforces what we know—that building success in music is hard—and underlines the need for organizations to work together to secure positive outcomes for the sector. Ultimately, AIM’s creative entrepreneurs want to be assured that they are fighting a fair fight, and we will continue to work across industry and government to help ensure U.K. music remains world-leading.”
Nonetheless, responses from the Musicians Union, Ivors Academy, Music Managers Forum Chief Executive Annabella Coldrick and Featured Artists Coalition CEO David Martin were more in line with Merck’s reaction.
“It is disappointing that the competition issues we see in the music-streaming market, which impact our members' earning capacity, will not be explored fully in a CMA investigation,” said Musicians Union General Secretary Naomi Pohl. “The CMA's release today highlights what it sees as positive impacts of music streaming, but we feel they have failed to recognize the very serious problems posed to creators. In the long term, this could diminish the diversity of British music available to consumers as musicians are forced to seek other ways to make a living. We had particularly hoped that the CMA would deliver for songwriters, who are currently receiving a small share of streaming revenue. Our fight to ‘Fix Streaming’ will continue, and we are still pushing for legislative reform to guarantee fair payments for our members.”
Tom Gray, chair of The Ivors Academy, said, “Without doubt, the CMA’s decision not to launch a full market investigation is disappointing for songwriters and composers and fails to address the urgent need to fully and properly value the song within streaming. While there have been positive steps to address historic contracts and explore user-centric models, much more needs to be done to put music creators at the heart of music so they are properly rewarded for their work. It’s a long road to fair and equal treatment and we are committed to working with music creators, the Intellectual Property Office and partners to achieve this.”
In a joint statement, Coldrick and Martin opined: "By their own admission, this initial report from the Competition & Markets Authority is primarily focused on consumers. In that context, we agree that streaming has been hugely positive. The recorded market is booming and music fans have never had such choice and access to music. But when it comes to the impact on artists, songwriters and the creator community, the findings do not represent reality, particularly in the context of record-label profits, which are seeing double-digit year-on-year growth. Many of the more complex and contentious issues raised by our members—for instance, around contractual reforms, disparity in negotiating power or the 'blank cheque' advances paid to major labels as part of licensing negotiations—are simply not referenced at all. On the face of it, the CMA report is disappointing for music makers. However, all of these issues remain the subject of intense discussion at the Intellectual Property Office, with a stated commitment to legislate if the industry cannot agree to market reform. It is ultimately this process that will deliver the most tangible results for artists, songwriters and music creators, and the FAC and MMF will be placing full focus on achieving a fairer deal for our members either via these IPO workstreams or through legislative intervention."
Merck noted: “We have always believed that the ultimate solution lies within the music industry itself, and we will continue to advocate on behalf of songwriters with the major recorded-music companies to push for a fair and equitable split. There would be no recorded-music industry without songwriters. Legislative and government authorities have the power to redress the economic imbalance where major recorded-music companies that own and control the major publishing companies are purposefully undervaluing the songwriter’s contribution. The IPO has a key role to play in redressing the imbalance and we will continue to support its work and efforts.”
