This morning, UK competition regulator the CMA published an update report from its market study on streaming and the music industry. You can read our coverage of that here.
The regulator has decided not to launch a full market investigation, but it has been doing some interesting digging into data provided by streaming services, major labels and other industry entities.
Here are some of the data points that stood out to us, with an emphasis on new numbers: for example those based on the CMA’s own analysis of non-public information.
– At the end of 2021, there were 39 million monthly active users of music streaming services in the UK: a figure that comes from the CMA’s analysis of data provided by those services. That’s up from 32 million in 2019.
– Back catalogue music – in this definition meaning anything more than 12 months old – has grown from 76% of UK streams in 2017 to 86% in 2021. This is based on the CMA’s analysis of data from the Official Charts Company.
– The ‘Big Four’ streaming services – Spotify, YouTube Music, Apple Music and Amazon Music – accounted for more than 95% of UK streaming revenues in 2021. Those four plus Deezer, SoundCloud and Tidal generated more than 99%.
– When it comes to streams, Spotify had a 60-70% share of all UK streams in 2021, ahead of Amazon Music (10-20%), Apple Music (10-20%) and YouTube Music (0-5%). Spotify’s share is down from 80-90% in 2015 “largely due to the increase in streams on Amazon and Apple”. These figures do not include streams on YouTube’s main user-uploaded content (UUC) service though.
(One quirk of the report: the ‘other’ category that accounted for 0-5% of UK streams in 2021 includes some real blast-from-the-past names: Blinkbox, Bloom.fm, Nokia, Omnifone, Rdio and Zune included. Not a mistake, as such: some of these were still current in 2015, the first year for analysis in this section of the report.)
– In 2021, the three major labels generated 73% of the revenue from UK music streams – down from 78% in 2017 – while their publishing subsidiaries had a share of between 50% and 60% of publishing revenues.
– The major labels had whole or partial rights in 92% of the top 1,000 singles in the UK in 2021, and whole or partial publishing rights in 88% of those songs. Independent labels and distributors account for around a quarter of UK streams, although the CMA notes that only two have a share greater than 1% individually.
– According to the CMA’s analysis of data provided by the three majors “a million streams per month will earn an artist around £12,000 a year” in the UK. This figure doesn’t include streams from elsewhere in the world, or live/publishing income.
– Collecting society PRS for Music distributes ‘unmatched’ royalties – the much-discussed ‘black box’ income from streams of tracks where the publishing rightsholder is unidentified – in the UK on a pro rata basis (i.e. dividing them by market share). There are some figures here, albeit ranges rather than specifics. It paid out £0m-£5m of these royalties in 2019; £10m-£15m in 2020 and £10m-£15m in 2021.
– There’s a fascinating table listing the operating margins for three unnamed streaming services since 2017. All three have gradually improved: one from an eye-watering negative margin of between -80% and -60% in 2017 to a positive 0-10% margin now:
– Since 2017, the share of streaming revenues retained by the DSPs has grown from 27% to 32%, while the share taken by labels has fallen from 40% to 37%.
– Around 20% of UK music streams come from playlists provided by the streaming services; 11% from autoplay and stations/radio features; and 42% from users’ own playlists. Read our separate news story on this section of the report here.
– Data from the Entertainment Retailers Association shows that nearly 25% of British adults overall were listening to music through smart speakers in 2021, up from 14% in 2019. Meanwhile, Ofcom figures show that 39% of UK adults now claim to have a smart speaker in their home, and of the people who use those devices, 62% stream music.
Finally, there is also some juice on some of the clauses contained within the major labels’ licensing deals with streaming services. They include:
– limiting the audio quality that tracks can be played at in the free, ad-supported tiers of services.
– limiting the number of times a user can skip and/or repeat tracks during an hour of listening time.
– setting a minimum number (often six) of ad interruptions that must be included in an hour of free listening.
– some agreements that include “obligations on the music streaming service to ensure that a major’s share of tracks within global playlists broadly corresponds to its overall share of streams”. Not a surprise, but useful to have it spelled out by a body that’s seen the contracts.
– ‘must-carry’ clauses that bar a streaming service from de-listing tracks from the majors “except in specific circumstances, such as where a track is the subject of a copyright dispute)”. One point made by the CMA is that these kinds of clauses are not typical in the DSPs’ contracts with independent music companies.
– a few agreements with clauses that enable major labels to propose amended terms to its deal if a streaming service “enters the upstream market” – i.e. starts signing artists – and if this results in the DSP “owning more than a certain percentage of music on its own service”. And these clauses enable the labels to terminate their licensing deal if they can’t agree on the amended terms.
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