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LONDON — The U.K. competition regulator has ruled out making further interventions in the music business and says that low returns from streaming, which songwriters and artists have expressed concerns about, are not being driven by the major labels’ dominance of the market.

In its final 165-page report into the U.K. music business, published Tuesday, the Competition and Markets Authority (CMA) says, however, that it is a matter for policymakers to determine whether current streaming revenue splits are “appropriate and fair” and if “wider policy interventions are required.” To that end, the regulator says it will share its final findings with the British government.

The CMA’s final 165-page report into the U.K. music business shows that consumers have greatly benefited from streaming, with the monthly price of streaming subscriptions falling by more than 20% in real terms between 2009 and 2021 due to not keeping pace with inflation. The monthly cost of an individual subscription to Spotify has remained £9.99 ($12.00) for the past decade.

At the same time, there’s been a huge rise in the amount of music that is available to consumers, from both paid subscription services and free ad-supported streaming, making it increasingly harder for all but the most popular artists to reach large audiences and earn a decent income.  

In 2021, more than 138 billion music tracks were streamed in the U.K., yet less than 1% of all artists achieve more than one million streams per month, according to the CMA’s research. That level of streams would earn an artist around £12,000 ($14,500) per year after record company and streaming service deductions, says the regulator. The CMA found that over 60% of streams were of music recorded by only the top 0.4% of artists. 

“We heard from many artists and songwriters across the U.K. about how they struggle to make a decent living from these [streaming] services,” says Sarah Cardell, interim chief executive of the CMA. Despite empathizing with creators’ “understandable concerns,” Cardell says the watchdog’s findings show that low returns for the majority of artists “are not the result of ineffective competition” between the three major record labels — Universal Music Group, Sony Music Entertainment and Warner Music Group – which make up 75% of the U.K.’s recorded music market (independents account for the remaining 25%).  

As a result, further intervention by the CMA “would not release more money into the system that would help artists or songwriters,” says Cardell. Therefore, the watchdog will not carry out a ‘phase 2’ full market investigation of the U.K. streaming business over competition concerns, which could have lasted up two years. Instead, it will share its findings with government policy makers for them to consider whether “additional action is needed to help creators,” says Cardell.

The regulator also warned that it may be forced to intervene in the future if the streaming business changes in a way that harms consumers’ interests. Determining factors identified by the CMA include mergers or acquisitions that could lead to a “substantial lessening of competition,” music companies prohibiting innovations that would benefit music fans and significantly higher streaming subscription prices.

The conclusions released Tuesday were a follow-up to an interim report released in July, in which the CMA said that streaming was working well for consumers. The regulator examined the integral role that services like Spotify and YouTube play in the booming music economy — and how those spoils are shared with creators. Just under 50 parties submitted written evidence to CMA officials as part of the study, including all three major labels, Google and independent music companies Believe, Beggars Group and Merlin. 

Responding to artist concerns around how little they earn from music streaming, the CMA says its analysis of the market found that “neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators.”  

According to its most recent earnings report, Universal Music Group’s revenue grew 13.3% to 2.66 billion euros ($2.75 billion) at constant currency in the third quarter of 2022. The world’s largest record label reported growth across all segments, including a 10.1% rise in recorded music revenue. UMG’s total revenues for 2021 were 8.5 billion euros ($10.1 billion) with net income of 1.271 billion euros ($1.51 billion) on an adjusted basis.   

Sony Music reported on Nov. 1 that its quarterly revenues had risen 5.9% year-on-year to $2.58 billion (¥359.3 billion), with recorded music revenue up 14.2% to $1.62 billion (¥224 billion) in the same period, driven by growth of its subscription streaming income. Last week, Warner Music Group announced its quarterly revenues rose 16% at constant currency (9% as reported) to $1.5 billion in the fiscal fourth quarter ended Sept. 30.    

Despite the concentrated nature of the market, outcomes for artists as a whole seem to be improving, the CMA says. Between 2012 and 2021, the average gross royalty rate increased from 19.7% to 23.3% and artists now have far greater choice over the type of deal available to them, ranging from traditional label deals to DIY distribution or artist and label service type deals. The CMA report also notes that the proportion of record contracts where labels own copyright of recordings in perpetuity fell from 66% to 26.4% in that same nine-year period.

Reaction among U.K. music trade groups to the CMA’s final report was mixed. A spokesperson for labels trade body BPI welcomed the regulator’s decision not to proceed with a full market investigation and said the study reinforces its view that the future health of the music industry is dependent on labels continuing to invest in artists.   

Graham Davies, chief executive of songwriters and composers group The Ivors Academy, took an opposing view, saying that the current music streaming business “is concentrating earnings to an unsustainable extent” and “rewards few music creators.” He said government intervention is needed “to fix streaming.”