The UK’s competition watchdog has found streaming has made the music industry challenging for many artists.
The Competition and Markets Authority (CMA) said more than 80% of recorded music was now listened to via streaming, with more than 138 billion streams in the UK last year.
MPs had demanded a “complete reset” of the industry, amid “pitiful returns” for artists.
They had called for the CMA to look into the power of the major players.
Although the primary focus of the report was on consumers, the watchdog found a small number of high-profile artists enjoyed most of the financial success while the majority made no substantial earnings.
CMA interim chief executive Sarah Cardell said: “For many artists, it is just as tough as it has always been – and many feel that they are not getting a fair deal.”
But the report notes streaming has made it easier not only for listeners to access music but also for artists to record and share it.
The report addresses the claim most artists are paid far too little for music streams and the business model benefits only big labels and star acts.
A million streams per month would earn an artist only about £12,000 per year, it says.
Spotify is believed to pay between £0.002 and £0.0038 per stream, Apple Music about £0.0059.
YouTube pays the least – about £0.00052 (0.05p).
Catherine Willcox, of UK country-music duo Ward Thomas, told BBC News: “Having been in the industry for more than a decade and achieving relative success – a number-one album, sold-out tours and many exciting festival spots – it may appear from the outside that we would be fairly comfortable financially.
“However, with the decline in album sales across the board and the rise in streaming, no-one is fully sure how they will sustain a creative career as the landscape of the industry changes so dramatically.”
The CMA noted every artist was competing harder than ever before for each of these streams – both with new artists and, in the form of the back catalogue, all the music ever made.
“We are incredibly lucky to be able to do this full time for the moment,” Wilcox said, “but it is always very tenuous – and this is coming from two artists who profit from the masters, the performance rights and live shows.
“This is even more difficult for songwriters who only get their writer’s cut.”
More artists than ever before are releasing music, the report says, but this does not mean more are successful.
Analysis published by the Intellectual Property Office (IPO) shows the number reaching one million UK streams per month remains low, about 1,700.
“Some of the best songwriters we know have had to secure other sources of income and so can’t dedicate the proper time needed to their craft,” Wilcox said.
“The best songs are yet to be written – but if they aren’t being fairly compensated, too many very talented people will be forced to quit.”
The report found streaming was now the primary means for artists and labels to distribute music and the public were embracing it.
Some of the other key findings include:
- Access to a wide range of music – old and new – means older songs can more easily find a new lease of life and new audiences
- The number of artists streaming music rose from about 200,000 to 400,000 between 2014 and 2020
A number of groups had called for a full market investigation by the CMA – and more solutions to support singers and songwriters.
But the watchdog rejected this because “our initial findings have not identified any significant concerns in terms of consumer outcomes relating to music streaming”.
The #BrokenRecord campaign was one of those groups – started by Gomez member Tom Gray at the beginning of lockdown, after artists lost touring income.
He told BBC News: “A serious concern is the mantra that things have always been this difficult.
“Indeed ‘just as tough as’ suggests things may have been worse – but we can see no evidence for such an assertion.
“The IPO carried out a report into creator earnings last year and could not find data to say where things were in the past, so it feels fairly groundless.
“Creators find it harder now to make income from recorded music than ever before.”
Listeners now have access to a huge choice of music for a fixed monthly subscription fee – and these have fallen in real terms.
But Mr Gray said this was bad for artists.
“Rhapsody, the first streaming service cost $9.99 in 2001,” he said.
“Streaming costs the same 21 years later.
“Obviously, that is a good deal for consumers – but is it destructive to the value of music itself?
“The answer ought to be, ‘Yes.'”
The CMA also touched on the “strong concern” from some artists labels gave insufficient information about their how their earnings were calculated.
Mr Gray said: “Whilst music has always been precarious, the pro-rata system is significantly more ‘winner takes all’ than anything we’ve seen before.”
The CMA said the market was delivering good outcomes for customers but it would be concerned if:
- innovation in the sector was decreased
- the balance of power changed and labels and streaming services began to make sustained and substantial excess profits
Association of Independent Music chief executive Paul Pacifico said: “We welcome the CMA’s update report, which reinforces what we know – that building success in music is hard – and underlines the need for organisations across music to work together to secure positive outcomes for the sector.”
British Phonographic Industry chief executive Geoff Taylor also welcomed the findings and said: “We will continue to engage with the CMA and government to help ensure that the streaming market works to the benefit of artists, songwriters, record companies and fans.”
Ms Cardell said: “Our initial analysis shows that the outcomes for artists are not driven by issues to do with competition, such as sustained excessive profits.
“We are now keen to hear views on our initial findings, which will help guide our thinking and inform our final report.”
Musicians’ Union general secretary Naomi Pohl said it was “disappointing” the “competition issues” in the streaming market “will not be explored fully by a CMA investigation”.
“The CMA’s release today highlights what it sees as positive impacts of music streaming – but we feel they have failed to recognise the very serious problems posed to creators,” she said.