The Competition and Markets Authority (CMA) said more than 80% of recorded music was now listened to via streaming, with more than 138 billion streams in the UK last year.
MPs had demanded a "complete reset" of the industry, amid "pitiful returns" for artists.
They had called for the CMA to look into the power of the major players.
Although the primary focus of the report was on consumers, the watchdog found a small number of high-profile artists enjoyed most of the financial success while the majority made no substantial earnings.
