Pro-rata vs User-centric in the music streaming industry

Xiaochang Lei

Economics Letters, 2023, vol. 226, issue C

Abstract: An endogenous model, which allows the artists to determine the streaming times strategically, is used to compare two remuneration rules in the music streaming industry: Pro-rata (P rule) and User-centric (U rule). The two judgement criteria are 1. efficiency, in terms of no dominance on quality profile. 2. egalitarian fairness, in terms of the lowest royalty among all artists. Our main result is that P rule always outperforms U rule in efficiency and fairness when the superstar’s marginal cost is the lowest. This means that the transition from P rule to U rule can not only enlarge the existing royalty gap but also decrease the efficiency of the music streaming industry.

Keywords: Pro-rata and user-centric; Digital streaming platform; Endogenous modeling (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:226:y:2023:i:c:s0165176523001362

DOI: 10.1016/j.econlet.2023.111111

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