Source · Select Committees · Culture, Media and Sport Committee
Recommendation 24
24
Paragraph: 183
The debate between the predominant pro-rata payment model and alternative methodologies such as user-centric has...
Conclusion
The debate between the predominant pro-rata payment model and alternative methodologies such as user-centric has been compelling. It is positive that new services are inventing new and creative ways to address creators’ and consumers’ concerns about the fairness and transparency of creator remuneration from streaming. We are concerned, however, that current contractual agreements between the major music companies and streaming services have the potential to stifle further innovation if they are misused. The CMA should consider in its case (recommended in paragraph 111) whether these agreements have the potential to (or indeed have already) prevented experimentation and innovation by streaming services.
Paragraph Reference:
183
Government Response
Not Addressed
HM Government
Not Addressed
The Government believes that transparency and fairness in the global streaming environment are important and is very aware of the pressures on music creators. The Government notes the DCMS Select Committee’s concerns about the possible market dominance of the major music groups and the potential for contractual agreements between the major music companies and streaming services to stifle innovation in the streaming market. However, it also notes that the digital era has created many new and alternative ways for artists to create and release their music into the market place which were not possible in the physical era, including many independent labels, artists’ service companies, and the possibility for artists to upload their content directly on to streaming platforms such as Spotify. This is a complex area, so it is vitally important that any action by the Government be led by robust evidence. The CMA is an independent regulator. There may be value in a market study, but it is for the CMA to decide how best to use its resources to deliver its objectives in making markets work well for consumers and businesses. We have written to the CMA on this recommendation. In addition, the Government notes the recommendation for the (statutory) Digital Markets Unit to consider designating YouTube with Strategic Market Status (SMS). The Government launched its consultation on the pro-competition regime for digital markets in July, including proposals for the scope of the regime and approach to designation, and will legislate as soon as Parliamentary time allows. We propose that it will be for the DMU to determine which SMS designation assessments to undertake, subject to specified prioritisation criteria. Though not yet in statute, SMS designation will follow a robust, evidence-based assessment of substantial and entrenched market power in an activity that provides it with a strategic position. This methodology will be applied by the independent Digital Markets Unit within the CMA.