{"id":35682,"date":"2023-03-09T15:53:47","date_gmt":"2023-03-09T15:53:47","guid":{"rendered":"https:\/\/publicknowledge.org\/?p=35682"},"modified":"2023-03-09T16:00:18","modified_gmt":"2023-03-09T16:00:18","slug":"the-streaming-market-is-fundamentally-broken-its-time-to-fix-it","status":"publish","type":"post","link":"https:\/\/publicknowledge.org\/the-streaming-market-is-fundamentally-broken-its-time-to-fix-it\/","title":{"rendered":"The Streaming Market Is Fundamentally Broken. It\u2019s Time To Fix It."},"content":{"rendered":"\n

My latest paper, \u201cStreaming in the Dark: Where Music Listeners\u2019 Money Goes \u2013 and Doesn\u2019t<\/a>,\u201d proceeds from what might be the only universal point of agreement in all of music policy: The streaming marketplace is fundamentally broken<\/strong>.<\/p>\n\n\n\n

It seemed like a simple question to answer, at first: Consumers are tossing more than $12 billion a year over the garden wall of music streaming services, but artists are seeing fractions of pennies. Money doesn\u2019t just vanish. <\/em>Rather than being funneled to artists, that $12 billion is being disbursed like a fire sprinkler. So where is it all going<\/em>?<\/p>\n\n\n\n

Like any question worth asking, the answer is complicated. The licensing deals which undergird the industry are closely guarded secrets. Only a small handful of people \u2013 at the world\u2019s largest record companies, fewer than a half dozen \u2013 are even allowed to look <\/em>at the contracts. That paranoia lets streaming services and labels throw blame at each other like the world\u2019s worst version of the Spider-Man pointing meme. <\/p>\n\n\n\n

These secrecy clauses (called non-disclosure agreements, or NDAs) are everywhere<\/em> in the music industry. Artists aren\u2019t allowed to see the deals that set their streaming payment rates; indie labels aren\u2019t allowed to see the deals distributors cut with labels on their behalf. <\/em>And in many cases, artists aren\u2019t even allowed to compare notes and talk about their own contracts<\/em>. (Meanwhile, in most other industries, it\u2019s actually illegal<\/a> for your boss to prevent you from sharing wage information with your coworkers.)<\/p>\n\n\n\n

But the real reason behind the secrecy is simple: These deals make both parties look pretty bad. <\/p>\n\n\n\n

We have a few examples to work off of (most famously a leaked 2017 contract between Sony and Spotify), and can reverse engineer some details. These deals are split between cash payments and non-cash kickbacks, such as discounts on advertising, premium playlist placement, and tweaking the recommendation algorithm to favor a label\u2019s catalog. Record companies like these deals for a very specific reason; they don\u2019t have to pass along any of the non-cash factors to their artists. (They\u2019re also not the worst option for streaming services, who are famously unprofitable<\/a> and light on cash.) And, because of the secrecy of these deals, it\u2019s these two interests \u2013 and their incentives \u2013 that are at the negotiating table.\u00a0<\/p>\n\n\n\n

This isn\u2019t a question of a few bad actors. This is a systemic problem created by the combination of copyright law and economics. If left unchecked, any music-like market (with its micro-monopolies, non-fungible goods, and free market negotiating power) will inevitably collapse into anticompetitive behavior. It\u2019s as close to a law of nature as you can find in economics. <\/p>\n\n\n\n

Allowing it to continue this way, however, is a public policy choice. <\/p>\n\n\n\n

If we can agree that the system is broken, then we can also agree that there must be a way forward. At a minimum, the Federal Trade Commission must use its statutory power to pierce the NDA curtain, study this marketplace, and determine how and where the market is failing consumers and artists. From there, the question becomes one of not whether major reforms should follow, but which ones. Lawmakers have a vast array of tools at their disposal, from antitrust law, to fair-dealing mandates, to app store regulation, to whistleblower protections. No one of these is going to work on its own; cleaning up this mess is going to take a little of everything.

We hope this paper\u2019s recommendations<\/a> can serve as a roadmap for ensuring a more equitable future for artists by fixing the music streaming market. If we do nothing but allow this buffet of monopolies, monopsonies, and unchecked market power to continue to operate without oversight or redress, it will be artists \u2013 and consumers \u2013 footing the bill.<\/p>\n","protected":false},"excerpt":{"rendered":"

New paper shines a light on the dysfunction of the music streaming ecosystem while proposing solutions to ensure a more equitable future.<\/p>\n","protected":false},"author":117,"featured_media":35680,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[12],"class_list":["post-35682","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights","tag-copyright-reform"],"acf":[],"yoast_head":"\nThe Streaming Market Is Fundamentally Broken. 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