Buccafusco and García, ‘Pay-to-Playlist: The Commerce of Music Streaming’

ABSTRACT
Payola – sometimes referred to as ‘pay-for-play’ – is the undisclosed payment, or acceptance of payment, in cash or in kind, for promotion of a song, album, or artist. Some form of pay-for-play has existed in the music industry since the nineteenth century. Most prominently, the term has been used to refer to the practice of musicians and record labels paying radio DJs to play certain songs in order to boost their popularity and sales. Since the middle of the twentieth century, the FCC has regulated this behavior – ostensibly because of its propensity to harm consumers and competition – by requiring that broadcasters disclose such payments.

As streaming music platforms continue to siphon off listeners from analog radio, a new form of payola has emerged. In this new streaming payola, musicians and labels simply shift their payments from radio to streaming music platforms like Spotify, YouTube, TikTok, and Instagram. Instead of going to DJs, payments (or their equivalents) go to platforms, third-party playlisters, and influencers who can help promote a song by directing audiences toward it. Because online platforms do not fall under the Federal Communications Commission’s (FCC’s) jurisdiction, streaming pay-for-play is not currently regulated at the federal level, although some of it may be subject to state advertising disclosure laws.

In this Article, we describe the history and regulation of traditional forms of pay-for-play and explain how streaming payola practices differ. Our account is based, in substantive part, on a novel series of qualitative interviews with music industry professionals. Our analysis finds the normative case for regulating the most common form of streaming payola lacking: contrary to conventional wisdom, we show that streaming pay-for-play paid to third parties, whether disclosed or not, likely causes little to no harm to consumers and may even help independent artists gain access to a broader audience. The case of ‘reverse payola’, in which a platform itself offers promotion in exchange for paying out a lower-than-market royalty rate, is potentially more concerning. Given this state of affairs, regulators should proceed with caution to preserve the potential advantages afforded by streaming payola while avoiding further exacerbating extant inequalities and anticompetitive concerns in the music industry.

Christopher Buccafusco and Kristelia García, Pay-to-Playlist: The Commerce of Music Streaming, 12 UC Irvine Law Review 805-866 (2022).

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