UK competition watchdog has music streaming in its sights

  • Sector dominated by tech platforms, music majors
  • Initial market study could lead to full investigation

LONDON, Oct 19 (Reuters) - Britain's competition regulator plans to launch an examination of the music streaming market to see whether a sector dominated by platforms such as Spotify (SPOT.N) and Apple (AAPL.O) works for consumers.

The watchdog's announcement on Tuesday follows a report from a UK parliamentary committee this year, which warned that the ties between music majors and streaming platforms could stifle innovation in the sector.

"The UK has a love affair with music and is home to many of the world's most popular artists," CMA Chief Executive Andrea Coscelli said. "We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers."

A market study is used to examine a sector and decide if an intervention is needed. Outcomes can include asking the government to change regulations, encouraging businesses to self-regulate, taking action against companies and a full, in-depth investigation.

A spokesperson for Spotify declined to comment. The British music industry body, the BPI, said it welcomed the study. "We look forward to seeing the scope of the project in due course and engaging with the CMA to inform its work," it said.

Britain's Competition and Markets Authority has taken an increasingly proactive role in the regulation of digital markets, with investigations already launched into the power of Google, Facebook and Apple in different parts of the ecosystem.

It said it would now turn its sights to music streaming which, in Britain, accounts for 80% of music consumption and is dominated by the likes of Spotify, Apple Music, Amazon (AMZN.O) and Alphabet Inc-owned YouTube (GOOGL.O).

Having been hammered by piracy in the late 1990s, the music industry moved towards a streaming model backed by either advertising or subscriptions as a way to secure more sustainable revenue for the sector.

Official figures show that the global recorded music market rose by 7.4% in 2020 to $21.6 billion, with a jump in demand for paid streaming services leading the way.

A British report on the sector showed that there were 139 billion audio streams in total last year. Despite the growth, artists have long complained that they do not receive a fair share from streaming platforms.

The UK parliamentary report also noted that the three major music companies, Universal (UMG.AS), Sony (6758.T) and Warner (WMG.O), also covered up to 75% of the UK recording market and had close ties with streaming platforms, prompting lawmakers to question the level of competition in the sector.

Additional reporting by Supantha Mukherjee in Stockholm Editing by Susan Fenton and David Goodman

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