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

Lei, X. (2023) Pro-rata vs user-centric in the music streaming industry. Economics Letters, 226, 111111. (doi: 10.1016/j.econlet.2023.111111)

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.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Lei, Mr Xiaochang
• Authors: Lei, X.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Economics Letters
• Publisher: Elsevier
• ISSN: 0165-1765
• ISSN (Online): 1873-7374
• Published Online: 06 April 2023
• Copyright Holders: Copyright © 2023 The Author
• First Published: First published in Economics Letters 226: 111111
• Publisher Policy: Reproduced under a Creative Commons License