Universal Music is facing a potential UK competition inquiry into allegations that it and other major record companies are making a fortune out of streaming at the expense of artists.
The threat came just hours after Universal made a stunning debut on the Amsterdam stock exchange where its value soared to almost EUR50bn.
Ministers have recommended that the Competition and Markets Authority look at music streaming and investigate the ‘meagre returns’ made by artists following a highly critical report by the Media Select committee earlier this year.
Julian Knight, chairman of the committee, said: “Crucially, ministers have accepted a key recommendation to refer the dominance of the major music groups to the Competition and Markets Authority.
“Our report laid bare the unassailable position these companies have achieved. We provided evidence of deep concern that their dominance was distorting the market.”
According to the Broken Record campaign, artists receive around 16% of the income from streams, record companies around 41% and streaming services such as Spotify around 29%
Artists such as NIle Rodgers of Chic was one of those to give evidence to the committee.
At the time he said; ” “When we started this advocacy four years ago, we could never have dreamed that it would be politicians who would be able to clearly see the problems in the music industry.”
Universal has an estimated 40% share of the music markets and its boss Sir Lucian Grainge said after the IPO that he saw the streaming business going from strength to strength as new avenues such as Tik Tok, electric vehicles and voice-controlled speakers increase in importance.
“The penetration rates of digital services in some of the largest countries haven’t yet reached those of more mature markets, so there’s plenty of headroom in those key markets, ” he told reporters.
That is before the expected growth in voice-controlled speakers, connected cars, social media, gaming, fitness, he added.
“This wave is taking place on a variety of platforms – some of which were not even on the radar just a few years ago.”
There has been no indication as yet from the CMA whether it will launch an investigation.