Expectation Meets Reality - Evaluating the financial impact of alternative payment systems on music streaming platforms

Frederik Jensen () and Patrik Wikström ()
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Frederik Jensen: ACT - Analyse des Crises et Transitions - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord - Université Sorbonne Paris Nord, LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord

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Abstract: A music streaming platform's ‘payment system' governs how it distributes a share of its revenues to rights holders. The current 15-year-old ‘pro rata' system, which pools subscription fees of a streaming platform and pays rights holders an amount proportional to their share of the accumulated number of streams, faces criticism from artists, record labels, and other stakeholders. Recent modifications by two platforms reallocate minimal revenue, and the impact of several other alternatives remains unclear. Using a dataset of 160,000 unique users from a leading French platform, we analyse five alternatives' financial impact and likelihood of implementation. Our analysis concludes that some systems concentrate more revenue to artists with loyal fan bases, and others have unexpected consequences going against the system's stated intentions. We find that systems with a clear distribution principle are generally more successful in reaching their stated goal than systems justified by an intention to redistribute revenue to specific artist segments

Keywords: Music industry; Streaming; Payment systems; Digital Platforms; Revenue distribution; Music economics; Subscription models (search for similar items in EconPapers)
Date: 2025-02-10
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04940353

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