Sun. Mar 26th, 2023

At the same time, the DOJ should conduct a companion investigation of possible antitrust issues on the composition side of the industry, Rose’s paper contends. Her study also calls for transparency requirements for deals between labels and streaming services, which could be imposed by the FTC or by lawmakers. And it backs user-centric payment models, such as those in used at Deezer, Tidal, and SoundCloud, where consumers’ money goes toward the artists whose music they consume instead of into a vast pot to be divvied up among the most-streamed artists jumpsuit.

Other recommendations in the Public Knowledge paper include abolishing the 15 percent to 30 percent fees that Apple and Google charge for in-app transactions and ensuring legal protections for industry insiders who might speak out to the FTC.

Along with the policy proposals, the study also offers a brief overview of industry basics, which, while familiar to insiders, Rose expects outsiders may consider “bananas.”

The paper comes at a time of political and regulatory ferment surrounding the music business. In 2021, UK lawmakers conducted an inquiry into music industry practices that led to a report urging a sweeping overhaul. On the live music side, the DOJ is already pursuing an antitrust investigation of Live Nation Entertainment. And, FTC Chair Lina Khan, who has taken a more aggressive view of antitrust enforcement against Big Tech, has warned that companies like Live Nation Entertainment (formed from the merger of Live Nation and Ticketmaster) can become “too big to care.”

A certain lack of competition is inherent in the music industry, Rose argues, because there are no perfect substitutes. “If I want to listen to the Lizzo album, I don’t care what you return to me on the search algorithm—if it’s not the Lizzo album, I’m going to go somewhere else to look for it,” she says. So the streaming services have every incentive to maintain a comprehensive catalog of the most popular music, while the major labels—the “Big Three” of Universal, Sony, and Warner—are incentivized to charge as much as possible without putting Spotify, which has never turned an annual profit, out of business. (For streaming services that are part of a bigger company, such as Apple Music, YouTube, and Amazon Music, cost is less of an object, because music can serve as a loss leader while the real money is made elsewhere.)

“If Spotify turns a profit, that means the major labels have done something very wrong in negotiation,” Rose says. A squeeze on profitability gives Spotify an incentive to pay the labels non-cash compensation, or payola, whether through algorithmic juicing or playlist placement, and also to embrace podcasts, which, even at Joe Rogan’s reported $200 million price tag, may be relatively cheaper .

Rose, who focuses on copyright and intellectual property issues, says her music paper came about when she tried to answer how the economics of streaming work out and realized the information was not available. She points to the 2020 edition of Dissecting the Digital Dollarthe most recent update of a report by the Music Managers Forum, a UK trade group, which states: “Most of the music industry’s deals with the streaming services are confidential, with only a small number of people at each label, publisher, or society party to the specifics of the arrangement.”

Rose says now, “It’s great for the major labels that all of this is secret, but everybody else gets screwed over.”

By ublvu