FTC Should Investigate Music Streaming Deals, Study Urges

At the same time, the Justice Department should conduct a follow-up investigation of potential antitrust issues on the industry composition side, the Rose document states. Her study also calls for transparency requirements for deals between record labels and streaming services, which could be imposed by the FTC or by lawmakers. And it supports user-centric payment models, like those used at Deezer, Tidal, and SoundCloud, where consumer money goes to the artists whose music they consume rather than to a large pot to be shared among the artists. most reproduced. in general.

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

Along with the policy proposals, the study also offers a brief overview of the industry’s basics, which, while familiar to experts, Rose hopes outsiders will find “bananas.”

The document comes at a time of political and regulatory ferment around the music business. In 2021, UK lawmakers conducted an inquiry into music industry practices that led to a report calling for a sweeping overhaul. On the live music side, the Justice Department is already conducting 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 ) 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 Lizzo’s album, I don’t care what you return in the search algorithm; if it’s not Lizzo’s album, I’ll go somewhere else to find it,” she says. So the streaming services have every incentive to maintain a full catalog of the hottest music, while the major labels – the “Big Three” of Universal, Sony and Warner – have incentives to charge as much as possible without put Spotify, which has never turned an annual profit, out of business. (For streaming services that are part of a larger company, like Apple Music, YouTube, and Amazon Music, cost is less of an issue, because music can serve as a loss leader while real money is earned elsewhere.) places).

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“If Spotify makes a profit, that means the major labels have done something very wrong in the deal,” says Rose. A reduction in profitability gives Spotify an incentive to pay record labels non-monetary compensation, or payola, either through algorithmic juicing or playlist placement, and also to embrace podcasts, which, even with the price than $200 million reported by Joe Rogan, it may be relatively cheaper. .

Rose, who focuses on copyright and intellectual property issues, says her music article came about when she tried to answer how the streaming economy works and realized the information wasn’t available. She points to the 2020 edition of Dissecting the digital dollarthe most recent 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 in each label, publisher or part of the partnership to the details of the agreement”.

Says Rose now, “It’s great for the major labels that this is all secret, but everyone else is screwed up.”

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