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 19th century. Most prominently, the term has been used to refer to the practice of record labels paying radio DJs to play certain songs in order to boost their popularity and sales. Since the middle of the 20th 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, record labels, artists, and managers simply shift their payments from radio to streaming music platforms like Spotify, YouTube, TikTok, and Instagram. Instead of going to DJs, payments go to playlisters or to influencers who can help promote a song by directing audiences toward it. Because online platforms do not fall under the 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 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 streaming payola lacking: contrary to conventional wisdom, we show that streaming pay-for-play, whether disclosed or not, likely causes little to no harm to consumers, and it may even help independent artists gain access to a broader audience. Given this state of affairs, regulators should proceed with caution to preserve the potential advantages afforded by streaming payola and to avoid further exacerbating extant inequalities in the music industry.

Keywords: advertising, intellectual property, false, FCC, FTC, consumer, protection, social media, influencer, playlist, sound recording, economics, regulation, Spotify, Instagram, Twitter