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UK Government Puts Support Behind Inquiry Into Major Labels
Christian Eede , September 22nd, 2021 15:07

The government has written to the Competition and Markets Authority saying there "may be value" in an investigation into fair pay

Three of the UK's major record labels could be investigated by the Competition and Markets Authority (CMA) after the government requested an inquiry into fair pay.

In the wake of ongoing disputes over the disparity between major labels' streaming profits and artist royalties, as well as a parliamentary inquiry into streaming platforms and major label practices, the government has now issued a letter to the CMA asking that they take a closer look at the matter, saying there "may be value" in such an investigation.

Any competition-based inquiry would focus on the practices and market domination of major labels Sony, Universal and Warner, while the UK government has also suggested that the watchdog look into YouTube's streaming profits.

"Should the CMA conduct a study, we look forward to detailing labels' role in supercharging the careers of British talent within a complex and dynamic ecosystem," the government said in a statement confirming its support for a CMA inquiry into the issue.

While the government has put its support behind a CMA inquiry, the organisation – which is an independent body – will decide for itself whether to press forward with such an investigation.

The UK parliamentary inquiry into music streaming, which issued its final report in July, concluded that the current system needs a "complete reset" to ensure that artists are more fairly paid. While the government's decision to support the idea of a market study by the CMA is significant, it could also be seen as a sign that it is not willing to get fully involved just yet and enact key recommendations from the July report.

As well as suggesting a range of reforms that platforms such as Spotify, Apple Music and YouTube should make, that report suggested that record labels should split streaming royalties with artists 50/50, a marked change from the current system where the artist's average share of streaming royalties sits at just 16 percent.

When the report was shared, Julian Knight, chair of the Digital, Culture, Media and Sport (DCMS) select committee, which conducted the inquiry, said: "We've heard of witnesses being afraid to speak out in case they lose favour with record labels or streaming services. It's time for the government to order an investigation by the Competition and Markets Authority on the distortions and disparities we've uncovered."