Music streaming prices at risk of rising ‘significantly’, watchdog warns

Music streaming prices could rise “significantly” because of the difficulty in switching between platforms, the competition watchdog has warned.

The Competition and Markets Authority (CMA) said rates of switching between different music streaming platforms were very low, at about 4pc per month, which could allow platforms to raise prices as the industry matures.

The CMA blamed the low switching rates on difficulties in moving personal playlists from one platform to another and the potential loss of playlists only found on certain platforms.

However, companies such as Spotify, Apple and Amazon are currently serving consumers well, the regulator found, but it warned that the lack of switching could harm competition further down the line.

The CMA said: “As the number of new premium users to compete for declines in future, there is a risk that prices for music streaming services will rise significantly for consumers or there may be a deterioration in the quality of services, if there isn’t a significant threat of switching.”

The watchdog said it would be concerned if it did not see signs of tougher competition as the market develops, for example through greater efforts to make it easier for listeners to move. While some services exist to help consumers transfer from one streaming platform to another, demand for them is currently low.

Despite the warning, the CMA concluded that consumers had benefited from the surge in music streaming. It marks a victory for tech firms and industry moguls, such as Universal Music chief executive Sir Lucian Grainge, who have argued streaming is good for the industry and good for listeners.

The CMA dismissed concerns that major record labels and streaming firms were failing to pay musicians fairly for their work. Artists including Nile Rodgers have complained that musicians are not being paid fairly, while MPs have demanded “equitable remuneration” to give musicians a larger share of the income.

The CMA found that over 60pc of streams came from just the top 0.4pc of artists. It also found that just 1pc of artists reach the 1m streams per month needed to earn only £12,000 a year from their music.

However, the watchdog said that neither record labels nor streaming companies were making excess profits and that issues about pay were not due to a lack of competition but “inherent to how music streaming works”.

Music industry revenue dropped from a peak of £1.9bn in 2001 to just £800m in 2015, though it has since recovered to £1.1bn in 2021.

The study found that there were around 39m monthly streaming listeners in the UK who use the services 138bn times a year.

In its final report into the market, published on Tuesday, the watchdog said prices had fallen by more than 20pc between 2009 and 2021 in real terms as the cost of subscriptions had not kept pace with inflation.

Many platforms including Spotify also offer cheaper, ad-funded versions of their streaming services.

The watchdog said the concerns raised by artists could be further considered by the Government and MPs.

Sarah Cardell, interim chief executive of the CMA, said: “Streaming has transformed how music fans access vast catalogues of music, providing a valuable platform for artists to reach new listeners quickly, and at a price for consumers that has declined in real terms over the years.

“However, we heard from many artists and songwriters across the UK about how they struggle to make a decent living from these services. These are understandable concerns, but our findings show that these are not the result of ineffective competition - and intervention by the CMA would not release more money into the system that would help artists or songwriters.”