The Seesaw Effect: How Unregulated Negotiations Undermine Regulated Prices in the Market for Music Streaming

Abstract

Spotify, Pandora, and other firms that stream copyrighted music must acquire a variety of copyright permissions in order to legally stream even a single song. Federal law regulates the price charged for some of those necessary licenses, but other equally necessary licenses are sold in the unregulated market. This causes a seesaw effect where government efforts to raise or lower rates are blunted, or even fully reversed, by responsive private negotiations. In essence, in the hope of achieving one or another policy aim, the government dramatically orders a reduction in the price of right shoes, only to see the unregulated price of left shoes move correspondingly higher in return. In this Article, I consider the degree to which this largely ignored seesaw undermines the public policy stories that scholars, government officials, and industry stakeholders tell about the regulation of music streaming. Those stories turn out to be significantly incomplete, because the regulatory infrastructure is likewise significantly incomplete.