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on Cultural Economics |
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Issue of 2026–01–26
three papers chosen by Roberto Zanola, Università degli Studi del Piemonte Orientale |
| By: | Gierens, Jakob |
| Abstract: | Despite driving the recent resurgence of music industry revenue, digital streaming platforms (DSPs) face persistent criticism over the fairness of their pro-rata royalty payout systems, sparking legislative initiatives in the EU, US, and UK. This article asks how much of the perceived unfairness in DSPs’ pro-rata payouts can be ascribed to platforms offering disparate types of music consumption without any organizational separation, and how the status quo could be improved. DSPs offer access to large libraries of records that users can browse and play from, as well as “programmed” listening features, e.g. editorial or algorithmic playlists. The latter channel constitutes 40% of Spotify streams by now, and pays at the same rate per stream as the former channel. Since DSPs pay by streams market share, boosting the streams of some artists via algorithmic or editorial promotion diminishes the payout for all others. I develop empirical and theoretical arguments for why paying every stream the same price is suboptimal, by presenting disconnects between the pure number of streams and consumers’ level of engagement with content. This suggests that under the pro-rata model, the payment distribution does not accurately reflect consumers’ preferences. I further show how a stream-source weighted pro-rata system aka active engagement model can increase the pay rate for active streams by up to 67% depending on the choice of the weighting factor, hereby diminishing the financial impact of platforms’ promotion choices and rewarding artists for creating music that consumers want to actively seek out. |
| Keywords: | Remuneration Policies; Music Streaming; Platforms; Music Industry; Fair Division |
| JEL: | Z11 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127101 |
| By: | Hao Yu |
| Abstract: | Click-fraud is commonly seen as a key vulnerability of pro-rata revenue sharing on music streaming platforms, whereas user-centric is largely immune. This paper develops a tractable non-cooperative model in which artists can purchase fraud activity that generates undetectable fake streams up to a technological limit. We show that pro-rata can be fraud-robust: when fraud technology is weak, honesty is a strict dominant strategy, and an efficient fraud-free equilibrium obtains. When fraud technology is strong, a unique fraud equilibrium arises, yet aggregate fake streams remain bounded. Although fraud is inefficient, the resulting redistribution may improve fairness in some cases. To mitigate fraud without abandoning pro-rata, we introduce a parametric weighted rule that interpolates between pro-rata and user-centric, and characterize parameter ranges that restore a fraud-free equilibrium under technology constraint. We also discuss implications of Spotify's modernized royalty system for fraud incentives. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.09573 |
| By: | Daisy Bertrand (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Emmanuel Fragnière (HES-SO Valais-Wallis - Haute École Spécialisée de Suisse Occidentale Valais-Wallis); Coralie Haller (EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg); Roland Schegg (HES-SO Valais-Wallis - Haute École Spécialisée de Suisse Occidentale Valais-Wallis) |
| Date: | 2025–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05446612 |