The study of the music streaming market by the Competition and Markets Authority (CMA) in the UK has concluded that Apple, Spotify, YouTube, and other audio streamers benefit consumers and artists.
Addressing artists’ concerns about royalties, CMA also found that music streamers do not make “significant excess profits” that could be shared with creators.
In 2021, British MPs proposed a complete reset of the music streaming market by increasing artists’ royalties commission from 16% to 50%, allowing musicians and songwriters should be allowed to reclaim the rights to their work from labels after a set period of time, setting a “code of conduct” for curators who make playlists on services like Spotify and Apple Music to avoid bribes and favoritism and more.
At the time, the chairperson of parliament’s Digital, Culture, Media and Sport (DCMS) committee, Julian Knight said:
“While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out. Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.”
However, Apple, Sony, Universal, and Warner Music rejected the proposal over concerns of “unintended consequences for investment into new talent” caused by the new policies.
Apple might not increase artists’ royalties commission in the UK, along with other audio streamers
In its final report, CMA said that the digitization of the music industry and competition among the music streaming service benefits consumers. Prices for subscriptions have decreased by more than 20% between 2009 and 2021, and some services even offer free music streaming with ads.
CMA also found that services shared money from streaming more widely with artists and songwriters, with the highest number of streams earning the most. Thus, the concerns raised by artists regarding their earnings from streaming were not “driven by the level of concentration of the recording market.”
Analysis found that neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators. Consequently, the issues concerning creators would not be addressed by measures intended to improve competition, but instead would need other policy measures in order to be addressed.
On the contrary, digitization of the music industry not only increased the number of people who had access to it but also increased the number of artists releasing music which shows healthy competition. Over the years, artists’ royalty deals with record labels had also improved with up to a 7% increase in their royalty commissions.
This has also meant that there is greater competition to reach listeners and for the associated streaming revenues.
Some parts of the streaming market have improved for some creators in recent years, with the CMA finding a greater choice of deals with record labels available. Whilst individual deals can vary considerably, the report highlighted on average royalty rates in major deals with artists have increased steadily from 19.7% in 2012 to 23.3% in 2021. For songwriters, the share of revenues going to publishing rights has increased significantly from 8% in 2008 to 15% in 2021.
CMA stated that an intervention was “unlikely” to release additional money in the system to pay creators more. The authority said it was going to share it findings with DCMS which was inquiring about the economics of music streaming over issues highlighted by creators to decide if Apple and other streamers should increase artists’ royalty commissions.
It is for policymakers to determine whether the split of existing streaming revenues between music streaming services, music companies, artists and songwriters is appropriate and fair, and the CMA will share its final findings with government to help inform that wider debate.
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