The UK's Competition and Markets Authority (CMA) has launched a market study into the booming music and streaming services market following a scathing report published by the Digital, Culture, Media and Sport Committee which recommended that, "...streaming needs a complete reset". The market study will consider whether the sector is operating in the interests of consumers, and whether competition is working well.
What is a market study?
The CMA uses market studies to examine why particular markets may not be working well for consumers, taking an overview of regulatory and other economic drivers and patterns of consumer and business behaviour.
The CMA will often issue lengthy questionnaires or 'requests for information' to collect information from a wide range of parties during the market study process, which can impose a significant burden on a business.
The CMA also has statutory investigatory powers available to it during a study, including powers to require any person to attend a specified place to give evidence to the CMA; to produce specified documents or categories of documents that are in that person’s custody or control; and to supply certain information in a specified form and manner. A failure to comply with any request issued by the CMA under its statutory powers can result in penalties being imposed.
What will the music and streaming market study focus on?
The CMA's market study will examine how the 'music streaming value chain' is operating, from the deals that artists make with record labels through to the music streaming services offered to consumers, paying particular attention to the roles of record labels and music streaming services.
The CMA will explore a range of issues in the study, including: the nature and extent of competition at different levels of the value chain; whether music companies and streaming services have market power; the extent to which the publishing arms of recorded music companies strengthen any market power of such companies; and the existence of any barriers to entry and expansion faced by smaller and newer music companies and music streaming services.
What are the possible outcomes of the market study?
The CMA must publish a market study report setting out its findings and the action (if any) it proposes to take by 26 January 2023.
The CMA's market study can lead to a range of outcomes for the music and streaming market, including: recommendations to the Government to change regulations or public policy; encouraging businesses in the market to self-regulate; consumer or competition law enforcement action against businesses; actions to improve the quality and accessibility of information to consumers; a 'clean bill of health' for the market; and a reference for a more in-depth market investigation.
Who might be affected?
The CMA's market study will have wide implications for the music industry in the UK. Music creators (including songwriters and performing artists), music companies (including music labels and music publishers), music streaming service providers, user-uploaded content service providers, industry bodies, regulators, and consumer groups are all encouraged to engage with the CMA from an early stage to ensure that their interests are represented in the study.
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