CMA Competition Probe Into Music Streaming Market

The UK’s competition watchdog, the Competition and Markets Authority (CMA), is turning its attention to the music streaming industry.

The CMA this week announced plans for an investigation (or market study) to establish if the music streaming sector, which is dominated by the likes of Spotify and Apple, works for British consumers.

At the same the CMA wrote to anti-virus companies asking them to review their current auto-renewal practices and terms and, where necessary, change them to help ensure they are treating their customers fairly and align with the Compliance Principles.

Music streaming

That came after the CMA enforcement action earlier in 2021, which led to leading anti-virus software providers giving formal commitments to make changes designed to make their automatically renewing contracts easier to understand and exit, as well as ensuring customers who auto-renew have extended refund rights.

After this intervention into the antivirus sector, the CMA has this week turned its focus onto music streaming, and the UK watchdog said it “will now carry out work to consider and develop the final scope of the market study, before formally launching it as soon as possible.”

This puts companies such as Spotify, Apple Music, Amazon and YouTube into the limelight.

It should be noted that a CMA market study is used to examine a sector and decide if an intervention is needed.

Conclusions of a market study can include asking the government to change regulations, encouraging businesses to self-regulate, taking action against firms, or a full investigation.

Industry criticisms

The music industry was hard hit by music piracy in the late 1990s – not helped by the fact that the music industry as a whole failed to adequately address a common user complaint when a person had already purchased a particular album on LP, cassette tape, or CD.

Consumers were forced to purchase the album all over again (at the full price) when they required the album in a new playback form factor, with no allowance for the fact that they had already purchased the album in an older format.

At the time there was also complaints about the size of cut that music studios would take out of artist payments.

Streaming music, instead of buying physical media, seemed to tackle these problems and deliver sustainable revenue, but now there have been complaints from artists about fair payments from music streaming giants for their songs.

CMA study

“The UK has a love affair with music and is home to many of the world’s most popular artists,” noted Andrea Coscelli, chief executive of the CMA. “We want to do everything we can to ensure that this sector is competitive, thriving and works in the interests of music lovers.”

“Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for more than 80 percent of all music listened to in this country,” said Coscelli. “A market study will help us to understand these radical changes and build a view as to whether competition in this sector is working well or whether further action needs to be taken.”

It should be noted that the CMA has a number of ongoing investigations in the digital markets space, including investigations into Google’s ‘privacy sandbox’; Facebook’s use of ad data; and Apple’s AppStore.

The CMA also launched the Digital Markets Unit (DMU), in April, which is operating in shadow form pending legislation that will provide it with its full powers.