Music and streaming
Final report
29 November 2022
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Contents
1. Introduction ................ 6
Context ............... 7
Statement of Scope, Update Paper and our consultations ....... 8
Background .............. 11
The impact of digitisation and streaming ............. 11
The market today .............. 15
2. Value Chain ............. 22
Overview .................. 22
Music rights .............. 24
Music companies ............ 26
The majors................. 26
Recorded music ................ 29
Music publishing ............... 37
Creators ................... 41
Artists ................. 41
Songwriters................ 52
Music streaming services and UUC platforms .......... 53
Music streaming services ............... 53
UUC platforms .................. 58
The music consumer .............. 60
How different parts of the value chain interact .......... 63
3. Agreements between record companies and streaming services ......... 66
Rights, payment terms and other common clauses ......... 66
Functionality clauses .............. 67
Most Favoured Nation clauses (MFNs) on prices (Price MFNs) .... 68
Other MFNs, non-discrimination clauses, and playlisting clauses......... 69
Must carry clauses ................. 70
Change of business model ........... 70
Confidentiality / NDAs ............ 71
4. Analysis on how well competition is working for consumers .......... 73
The supply of recorded music to music streaming services .... 73
The nature and strength of competition ........ 73
Bargaining position of music streaming services with record companies ...... 75
Impact of contractual clauses in licensing agreements on competition between
record companies ............ 77
Majors’ combined activities in licensing recording and publishing rights ....... 81
Conclusions ............... 82
The supply of music streaming services to consumers ........... 83
Nature and strength of competition ........ 83
Barriers to entry and expansion ............. 86
Barriers to switching ................ 89
Barriers to innovation ............... 91
Impact and transparency of playlists ............ 93
Conclusions ............... 95
Future competitive dynamics ............... 97
5. Analysis on how well competition is working for creators ...... 100
Artists .............. 100
Market concentration ............. 100
How competition to sign artists has evolved in the streaming era ........ 101
Barriers to expansion in recorded music ........... 102
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Impact of terms in majors’ contracts with music streaming services ..... 103
Bargaining position and outcomes for artists ............ 112
Information asymmetry, artist representation and transparency .... 117
Conclusion - artists ................ 122
Future dynamics in competition to sign artists .......... 123
Songwriters ................... 124
Publishing share of revenues .............. 126
Integration of recording and publishing businesses ......... 132
Extent to which competition to sign songwriters is increasing the publishing
share ............... 134
Tacit collusion ................. 139
Majors’ influence on CMOs........... 140
Other concerns raised by songwriters ........ 142
Conclusion - songwriters .............. 144
6. User Uploaded Content (UUC) platforms ......... 148
The relative bargaining power of UUC platforms and rightsholders .... 149
Value gap in what YouTube pays for music compared to ad-funded music
streaming services................ 152
YouTube’s impact on music streaming services ............ 154
Scope for incremental revenues from UUC platforms ........... 158
The UUC policy framework ................ 159
Content management systems and EU Copyright Directive ... 160
Our findings on potential for UUC platforms to grow music revenues ........ 161
Possible issues to consider on copyright legislation ...... 162
7. Conclusion ............. 163
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