DOJ’s Kanter: Streaming Profit Incentives ‘Out of Sync’ With Artist Goals

Profit incentives for streaming services are “very much out of sync” with those of artists, DOJ Antitrust Division Chief Jonathan Kanter said Wednesday: Enforcers will take it into account during its merger guideline review with the FTC (see 2204220056). He and FTC Chair Lina Khan heard from several musicians, content creators and consumer advocates about the effects of consolidation in media and entertainment during the third listening session. The FTC is taking note of the “significant transformation” in the media and entertainment sector over the past decade, Khan said.

Streaming income isn’t sustainable for middle-class, working musicians, said Union of Musicians and Allied Workers (UMAW) co-founder Damon Krukowski. He said one of his bands grossed $2,192 for about 730,000 Spotify streams in the past 28 days, he said. “You can’t survive off it,” he said. Spotify has a 31% global share of the market, Apple has 15% and Amazon 13%, he noted. They offer punishing terms, and musicians have no negotiating power, he said.

Kanter highlighted that artists are paid based on distribution, while streaming services are paid based on stock price, growth and wealth. “The two are very much out of sync,” he said.

The agencies should do a retrospective review of the 2010 Ticketmaster-Live Nation deal for its anticompetitive effects on consumers and workers, advocates told the agencies. The Ticketmaster deal is a prime candidate for retrospective review, said SeatGeek co-founder Russell D'Souza. Instead of suing to block, DOJ entered a consent decree that relies on behavioral remedies blocking the company from retaliating against potential customers, but the department has found repeated violations against the consent decree, he said. He noted President Joe Biden’s executive order on competition affirmed agency authority to challenge previous deals when the consummation is found to violate antitrust laws.

Since the 2010 acquisition, Live Nation Entertainment has made more than 50 transactions, said John Breyault, National Consumers League vice president-public policy, telecommunications and fraud. The deal’s consent decree placed an enforcement burden on the people with the least amount of resources -- musicians, venues and promoters, said Future of Music Coalition Director Kevin Erickson. The stagnation of wages for venue support staff directly correlates with the 2010 deal, and in some instances, wages have decreased, said UMAW organizer Marshall Moran.

Khan highlighted “troubling trends in news media,” where local newspapers have high staff turnover and are facing growing consolidation. More than half of U.S. counties have a single newspaper, often owned by a larger regional chain, she said, calling news media and entertainment the “lifeblood” of democracy. The continued integration of cable and broadband companies is resulting in major changes in how these markets are structured, she said. After hearing from advocates, Khan said she was struck by the material effects like high content prices, quality of content and lower income for content producers. The broader effects can sometimes be more difficult to quantify for enforcers like basic questions about what it means for a smaller number of companies to be controlling content and news arteries, she said.

The Songwriters Guild of America is ready to work with enforcers so they can better approach consolidation within the music industry, said counsel Charles Sanders. Public Knowledge Legal Director John Bergmayer advocated for clear rules that limit self-preferencing on platforms.