Musicians aren’t losing out from music streaming, UK regulator says

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The huge profits of record companies and streaming services such as Apple Music are not at the expense of musicians and artists, a British regulator has announced.

In early 2022, the UK’s Competition and Markets Authority launched an investigation into the music streaming market to determine whether companies at the top of the food chain have too much power and whether artists and subscribers are being treated fairly. In November, the CMA made a decision: All is well.

Published on Tuesday, the CMA’s final report argues that consumers have benefited from the shift to streaming and increased competition. In real terms, consumer prices fell by more than 20% between 2009 and 2021, he found.

Regarding the concerns of music creators, including songwriters and musicians, who claim to have earned very little from streaming, the CMA believes the concerns are largely unfounded.

With more artists competing for attention, streaming revenue is shared “more broadly.” This includes an increase from 200,000 artists in 2014 to 400,000 in 2020, doubling the competition.

The watchdog found that, as is usually the case in meritocracies, top producers get the lion’s share of the revenue. Over 60% of streams listened to were recorded by the top 0.4% of artists, he found.

Although an artist could expect to earn around £12,000 ($14,410) from 12 million UK streams in 2021, less than 1% of artists actually achieved this level.

Labels don’t care about profits

As for how much record labels and streaming services actually pay, the CMA’s analysis found that “neither record labels nor streaming services are likely to realize significant excess profits that could be shared with creators.”

Average royalty percentages in major artist deals have actually risen over time from 19.7% in 2012 to 23.3% in 2021. Songwriters have also benefited, seeing an 8% share of revenues in 2008 to become an average of 15% by 2021.

Therefore, the concerns of originators will not be resolved by the introduction of measures to improve competition, the CMA continued. However, other policy measures will be needed to address grievances.

“However, the research highlights that the issues raised by artists could be further considered by government and policy-makers as part of their ongoing work following the DCMS Select Committee’s inquiry into the economics of music streaming,” the CMA concluded.

“Streaming has changed the way music fans access vast catalogs of music, providing a valuable platform for artists to reach new listeners quickly and at a cost to consumers that has declined in real terms over the years,” said the CMA’s interim executive director Sarah Cardell.

“However, we have heard from many artists and songwriters in the UK about how they are struggling to make a decent living from these services,” continued Cardell. “These are understandable concerns, but our findings show that they are not the result of ineffective competition – and the CMA’s intervention will not free up more money in the system that would help artists or songwriters.”

The UK Department for Digital, Culture, Media and Sport launched an investigation in October 2020 into the topic of music streaming royalties.

Current complaint

Complaints from musicians and songwriters about low streaming revenue have been around for quite some time, with Apple among the targets due to the popularity of Apple Music.

In 2021, Apple sent a letter to musicians explaining that it pays pennies per stream to record labels and that 52% of subscription revenue goes to record labels, which in turn pay artists.

Apple controls just one-fifth of the UK streaming market, according to a UK government report in July 2022. Spotify led with around 60% of the market, while Amazon made up 30%.

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