Article: New Public Knowledge Paper Shines a Light on the Broken Music Streaming Industry

New paper shines a light on the dysfunction of the music streaming ecosystem while proposing solutions to ensure a more equitable future.

Today, we’re happy to announce our newest white paper, “Streaming in the Dark: Where Music Listeners’ Money Goes – and Doesn’t,” by Public Knowledge Senior Policy Counsel Meredith Rose.

The paper shines a light on the dysfunction of the music streaming ecosystem, exploring how a culture of secrecy and unchecked market power have created an environment in which consumers pay to rent (rather than own) their music library; competition is dwindling; artists struggle to profit from their own work; and independent labels cannot compete against the “Big Three” major record companies that collect almost 85% of all U.S. digital music royalties.

These same powerful middlemen control choke points within the music industry, allowing major labels and “superstar” talent to claim the overwhelming majority of the financial pie while leaving small and independent artists and labels with the scraps. All this occurs within a black box wrapped in nondisclosure agreements, which limits the ability of artists, activists, and policymakers to effect meaningful change.

The paper encourages the Federal Trade Commission to “pierce the NDA curtain” by studying the music streaming marketplace to determine just how bad things are, and where lawmakers can kickstart reform. The paper urges policymakers to use a vast array of tools, including antitrust law, fair-dealing mandates, and app store regulation, to fix a broken market. It also proposes requiring user-centric payment models that funnel consumer money to the artists they listen to, instead of the rightsholders who managed to extract the best deal. Finally, protecting whistleblowers so that artists, staff, and other industry insiders can safely deliver testimony and evidence “under seal” to both the FTC and Department of Justice, enabling these agencies to help correct this market.

The following can be attributed to Meredith Rose, Senior Policy Counsel at Public Knowledge:

“Music streaming is a messy, broken, anticompetitive and inequitable time bomb. The market actively incentivizes anticompetitive behavior, and so far, it’s been allowed to go on unchecked. This status quo poses a substantial threat to innovation, choice, and quality for music listeners and musicians alike.

“For better or worse, subscription-based music streaming is the future we all face. But something has to give if we’re going to improve this market for artists and consumers. The first step is to pull back the NDA curtain so that artists, services, and consumers alike can understand how billions of dollars can seemingly vanish into thin air. Once that has happened, lawmakers can bring to bear their broad and deep toolbox of remedies—regulation, litigation, and legislation—to ensure a more equitable future.

“Competition law must necessarily be at the forefront of this effort. As surely as gravity pulls us down toward earth, an unregulated music licensing marketplace inevitably collapses into anticompetitive behavior. This is not a simple market of competing firms making substitutable widgets; it is a buffet of monopolies, monopsonies, and unchecked market power wielded without oversight or redress. Unless something is done to bring back competition and fair play, artists – and consumers – will be the ones footing the bill.”

You may view the paper. You may also view our recent blog post, “The Streaming Market Is Fundamentally Broken. It’s Time To Fix It,” for more information on why we need to reform the music streaming industry.

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New Public Knowledge Paper Shines a Light on the Broken Music Streaming Industry