The best music streaming services in the UK will be examined in a larger study to assess whether the market is competitive enough.
YouTube, Spotify, Apple Music and Amazon will be scrutinized by the Competition and Market Authority.
MPs recently called for a “complete reset” of the music industry, amid “pitiful returns” for artists.
A report from the DCMS Committee asked the CMA to look into streaming and the power of major players.
On Tuesday, the CMA confirmed it will make moves to initiate such an investigation.
DCMS Commission Chair Julian Knight MP said, “The fact that the CMA has made it a priority is a great achievement for the DCMS Commission, endorsing one of the key recommendations of our music streaming investigation.
“Our investigation has highlighted fundamental problems within the structure of the music industry itself. This action marks a fundamental step forward.”
After the CMA board discussion, the regulator will work to consider and develop the final scope of the market study, before formally launching it as soon as possible.
The CMA has written to the government and the DCMS Committee to outline the next planned steps.
- The parliamentarians are calling for a complete restoration of music streaming
- Stones and Jones call for streaming reform
- Streaming “threatens the future of music”
Andrea Coscelli, chief executive of the CMA, said: “The UK has a love affair with music and is home to many of the world’s most famous artists.
“We want to do everything possible to ensure that this industry is competitive, thriving and works in the interest of music lovers.
“Over the past decade, the music industry has evolved almost beyond recognition, with streaming now accounting for over 80% of all music heard in this country.
“A market study will help us understand these radical changes and determine if competition in this sector is working well or if further action is needed.”
Market studies are used by the CMA to identify and address any competition and consumption problems.
The British Phonographic Industry (BPI), which represents the UK’s recorded music industry, said it will abide by any investigation.
“Should the CMA conduct a study, we look forward to detailing the role of labels in boosting the careers of British talent within a complex and dynamic ecosystem,” the body previously said.
In addition to the proposed market study, an independent CMA panel is investigating Sony’s acquisition of Awal.
Awal is an artist and label service provider who has released music from artists including Little Simz, Nick Cave and the Bad Seeds and Billie Eilish’s brother and collaborator Finneas.
The CMA said UK recorded music distribution was dominated by three big groups last month: Universal Music, Sony Music and Warner Music.
He added that Sony’s acquisition of Awal could lead to a worse deal for the musicians and that Awal could become a significant competitor in its own right if left to work alone.
The culture committee’s report, released in July, was ultimately critical of the British music industry after hearing rehearsals from musicians such as Nile Rodgers, Elbow and Radiohead in a six-month investigation into music streaming.
While streaming helped save the music industry, after two decades of illegal downloads, record labels and streaming companies have subsequently “harnessed the structural advantages to reach seemingly unassailable positions” in their markets, he said.
In its response, the government said the select committee’s investigation provided “valuable insights” into music streaming, but “there is still work to be done to understand the problems musicians are facing.”
He requested further research into how musicians were paid and royalties shared, saying he would “evaluate different models” to see how they would affect the industry.
The government has also said it wants to “explore ways in which new and future songwriters” [and] composers “could be paid more equitably.
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