New study urges FTC to investigate streaming deals

The Federal Trade Commission should investigate the music industry’s streaming practices, a study by the nonprofit consumer advocacy group Public Knowledge finds. Written by Meredith Rose and titled “Streaming in the Dark: Where music listeners’ money goes—and doesn’t,” the new white paper highlights complex issues with the way digital streaming platforms and record labels structure their deals with artists, and charges the FTC with the task of following the money.

“The streaming market place is fundamentally broken,” Rose writes in the study’s introduction. “Consumers are pouring more than $12 billion dollars a year into music streaming services. From there it enters a dark, labyrinthine economy shaped by centuries-old laws and unchecked market power. When that money emerges out the other side and reaches artists, it has been reduced to fractions of pennies.”

According to Rose, the FTC should wield its power to compel companies to disclose their business practices — by subpoenaing documents and testimony, if necessary — to bring these shadowy mechanisms to light. The agency “must pierce the NDA curtain,” she writes, referring to the long-running industry practice of using strict non-disclosure agreements to prevent artists from discussing the nature of their contracts, “to study this marketplace and determine just how bad things are.”

Separately, Rose argues that the DOJ’s Antitrust Division should conduct a concurrent investigation into the practices of the publishing side of the music industry, which the department has technically overseen since signing consent decrees with the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) more than 70 years ago. (The DOJ is already looking into potential antitrust violations on the live music side of the industry; an ongoing investigation of Live Nation and Ticketmaster entered public discourse following a well-publicized Taylor Swift ticketing fiasco in the fall.)

“This isn’t a problem of a couple of people behaving badly,” Rose told Pitchfork’s Marc Hogan, who first reported the study’s findings. “This is a structural problem. We have set it up so that the rational thing to do is going to be a bad outcome for everybody on either end of the chain. If we’re going to fix it, we need to change the system such that these incentives are not structured the way that they are.”