Today’s Cache dissects big themes at the intersection of technology, business and policy. Written by John Xavier, tech news lead at The Hindu
Is the music-streaming industry anti-competitive?
Music industry has undergone a seismic shift in the past one decade. People have started to stream music more than buy physical records. According to a 2017 report by Goldman Sachs, the industry was well on its way to fully replace physical records business with digital alternatives by 2024. And that prediction seems to be coming true as it is hard to spot music CDs or DVDs any more. Almost all published music has been digitised.
For an industry plagued with piracy in the late 1990s, the streaming model was a safe and profitable alternative. Driven by advertising and subscriptions, the model changed the rhythm of the industry beat by beat. It has also created a new band of players, making streaming apps as gate-keepers, replacing retailers who sold physical copies in the pre-digital era.
Spotify and Apple Music are among the top few glorified gate-keepers for music in these digital times. They hold copyright licenses from songwriters and publishers for the music they host on their platforms. In plain-vanilla terms, a publishing administrator protects the use of music and collects royalties on behalf of the content owner.
At other times, they use their position to secure opportunities like ‘sync licenses’ for videogames, films and ads. They also play a role in setting up joint compositions and pitching songs to artists and labels. And most deals with large music publishers see copyright owners get only half the royalties even though they own the content.
This connection between labels, publishers and streaming apps has grown significantly in less than a decade, which has made regulators in Britain take notice.
The U.K.’s competition regulator has said it is interested in knowing whether the music streaming industry is competitive and benefits consumers. It estimates four-fifths of all music consumption, in Britain, is dominated by Apple, Spotify, YouTube and Amazon.
According to a U.K. parliamentary report, three major music companies, Universal, Sony and Warner, cover up to three-quarters of the country’s recording market. The trio also share close ties with streaming platforms.
The global recorded music market rose by 7.4% in 2020 to $21.6 billion, according to an estimate by Reuters. That’s a market size which can’t be slighted.
“The U.K. has a love affair with music and is home to many of the world’s most popular artists,” Andrea Coscelli, Chief Executive of Competition and Markets Authority (CMA) said in a statement. “We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers.”
The CMA has launched a market study to decide whether an intervention is required. Outcomes can include asking the government to change regulations, encouraging businesses to self-regulate, taking action against firms and a full, in-depth investigation.
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