FTC Should Investigate Music Streaming Deals, Requests Study

At the same time, the DOJ should conduct a further investigation into possible antitrust issues on the industry composition side, according to Rose’s article. Its study also requires transparency requirements for agreements between labels and streaming services, which could be imposed by the FTC or by lawmakers. And it goes back user-centric payment modelslike those used at Deezer, Tidal and SoundCloud, where consumers’ money goes to the artists whose music they consume instead of being split into a vast pot to be split among the most streamed artists.

Other recommendations in the Public Knowledge document include waiving the 15-30% fees charged by Apple and Google for in-app transactions and ensuring legal protections for industry insiders who may turn to the FTC.

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

The document comes at a time of political and regulatory fermentation around the music industry. In 2021, UK lawmakers conducted an investigation into music industry practices which led to a report requiring a major overhaul. On the live music side, the DOJ is already pursuing an antitrust investigation into Live Nation Entertainment. And, FTC Chairwoman Lina Khan, who has taken a more aggressive view of antitrust enforcement against Big Tech, said warned that companies like Live Nation Entertainment (formed from the merger of Live Nation and Ticketmaster) may 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 send me back on the search algorithm – if it’s not Lizzo’s album, I’ll go find it somewhere else,” she says. Thus, streaming services have a vested interest in maintaining a comprehensive catalog of the most popular music, while major labels – the “Big Three” of Universal, Sony and Warner – have an incentive to charge as much as possible without putting Spotify , which has never made an annual profit, bankrupt. (For streaming services that are part of a larger company, like Apple Music, YouTube, and Amazon Music, the cost is less important because the music can act as a loss leader while the real money is earned elsewhere. .)

“If Spotify is making a profit, it means the major labels did something very wrong in the negotiation,” Rose says. A squeeze on profitability incentivizes Spotify to pay labels non-monetary compensation, or payola, whether through algorithmic juice or playlist placement, and also to embrace podcasts, which even To Joe Rogan announced a $200 million awardcan be relatively cheaper.

Rose, who focuses on copyright and intellectual property issues, says her piece on music was born when she tried to answer the question of how the streaming economy worked and found herself. realized that the information was not available. She talks about the 2020 edition of Dissecting the digital dollarthe latest update to a report from the Music Managers Forum, a UK trade group, which states: “Most of the music industry’s deals with streaming services are confidential, with only a small number of people at each label , publisher or part of the company to the specifics of the arrangement.

Rose now says, “It’s great for the majors that it’s all secret, but everyone gets screwed.”

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