Fairness and royalty payment system on music streaming platforms

Abs­tact

We stu­dy the con­se­qu­en­ces of the imple­men­ta­tion of a new pay­ment sys­tem in the music stre­aming mar­ket. Inste­ad of pooling all the sub­scrip­tion reve­nu­es and remu­ne­ra­ting arti­sts accor­ding to the­ir num­ber of stre­ams, an alter­na­ti­ve pay­ment sys­tem con­si­sts in adop­ting a user-cen­tric per­spec­ti­ve and splits the sub­scrip­tion fee of each user among the arti­sts she listens to pro­por­tio­nal­ly to the num­ber of stre­ams. Besi­des being fairer becau­se it is more in line with each consumer’s pre­fe­ren­ces, such a new pay­ment could impact three other dimen­sions of fair­ness in the music indu­stry: the reve­nue yields from acti­ve vs. pas­si­ve stre­ams, the star sys­tem that exi­sts despi­te suc­cess is known to be discon­nec­ted from the dif­fe­ren­ce in talent, and the possi­ble bias that exi­sts in recom­men­da­tion sys­tems. Using data pro­vi­ded by a leading music stre­aming plat­form in Fran­ce from more than 140,000 uni­que users during six mon­ths (427 mil­lion stre­ams) we show that a user-cen­tric pay­ment sys­tem will not only be fairer becau­se con­su­mers’ cho­ices will be bet­ter ali­gned with reve­nue sha­ring but also becau­se a user-cen­tric pay­ment sys­tem (i) would favor acti­ve stre­ams at the expen­se of pas­si­ve ones, (ii) would redu­ce the advan­ta­ge of super­stars and (iii) would mode­ra­te the rela­ti­ve advan­ta­ge of major labels in cura­ted streams.