Bas van Dijk

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The 21st century has seen some drastic innovations in the way that technology plays an important role in everyone’s daily life. The key innovations in this came from several small tech start-ups who brought a revolutionary new business model to disrupt the existing incumbents of the traditional markets. Such disruptions are prime examples of competition in a market being a primary driver for innovations, which can significantly improve consumer value. But what happens when these small start-ups continue growing and expanding their business without the balance of some worthy competitors?

That is the current situation that the tech market finds itself in, with the Amazon, Apple, Facebook and Google forming the Big 4 of the tech industry. These tech giants have grown at a tremendous rate during their relatively short lifetimes and have aggressively dominated their own market. This market domination has led to the American House Judiciary Committee to start an investigation in whether these firms are violating antitrust laws and whether their monopolistic position can be considered to be harmful.

In the report published recently by the Democratic leaders of the House Judiciary Committee several accusations are made about the monopolistic behaviour of the big tech companies. An example of the competitive advantage of the monopoly of amazon can be seen in how they are providing a platform to external sellers but at the same time are competing with these external sellers by selling similar products themselves. This has resulted in Amazon placing their own products higher in search results which gives them an unfair competitive advantage. A similar accusation has also been made against google, who are also tend to favour their own services when supplying search results.

Google has also been accused of unfair competition and abuse of their monopoly through their Android data collection. The committee has reported on Google collecting Android app data from other companies, which was then used by Google to create their own similar app to compete with the other companies. This again gives an unfair competitive advantage and makes it impossible for new companies to enter the market and actually make a profit from their new original product, when Google can just copy it.

Another reason that it has become impossible for new competitors to enter these markets is the extreme size and buying power of the established big tech firms. This can be seen in the case of Instagram. Instagram was gaining a massive user base and popularity which could have competed with Facebook. Instead of Facebook fairly accepting the competitiveness of the market they straight up bought the entirety of Instragram. This makes it impossible for a competitive market to be established since all dangerous potential competitors can easily be bought.

While these companies originated as innovative competitors bringing the fight to the established incumbents they have now outgrown that role. They are no longer the innocent innovation drivers and now endanger the competitive market economy. Their extreme power has become uncontrollable causing them to potentially have more power than some countries governments. The position of these firms and the necessity of potential regulations can be illustrated by the following quote from the report from the the House Judiciary Committee’s Democratic leadership: “This pattern of behavior raises questions about whether these firms view themselves as above the law, or whether they simply treat lawbreaking as a cost of business.”

Sources
– https://www.nrc.nl/nieuws/2020/10/06/amerikaanse-commissie-pleit-voor-forse-inperking-marktmacht-big-tech-a4014988
– https://www.nytimes.com/2020/10/06/technology/congress-big-tech-monopoly-power.html
– https://www.nrc.nl/nieuws/2020/01/29/we-zijn-beter-af-zonder-big-tech-monopolie-a3988611

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The music industry has gone through a turbulent past few decades with the digitalization of the medium disrupting their traditional album sale business model. The transition from the physical record sales to online subscription based streaming has provided an enormous amount of added value for consumers, who now have the entire library of music produced within a few clicks reach, while only paying a fixed subscription cost every month. One stakeholder that has however not profited as much from this streaming transition are the musicians, who have seen their incomes decline significantly due to the lack of streaming royalties. While the platforms do provide artists access to reach a new larger audience, that they otherwise would not have reached, the incomes from streaming are often not enough for professional musicians to make a living. During the years Spotify has had conflicts with several popular artists such as Thom Yorke and Taylor Swift, who have withheld their music from the platform due to complaints about insufficient compensation (Hogan, 2015).
This decline in music royalties has caused artists to search for new creative ways and business models with which they can make money from streaming. One recent example of this is the band Vulfpeck who have been quite active in criticising the payment system from Spotify and trying to come up with alternative ways to make money. In 2014 the band released an entirely silent album, called Sleepify, on Spotify and encouraged their fans to stream this while sleeping. With the 20,000 dollar gained from the Spotify streams they organised a free tour for their fans to attend (McIntyre, 2014). For their newest album, that is going to be released, Vulfpeck have come-up with a new business model to monetize their music. They have auctioned of two minutes and 30 seconds for track 10 on their new album on eBay. Effectively they are working around the system of Spotify to sell their own advertising space on their album.
With this they have created an interesting application of advertising that raises the question of who has the right to advertise along music streaming, the artist or the platform? While this article is being written the album has not yet been released, while the online auction has sold for a bid of $70,100 while it remains a mystery what track 10 will contain (O’Brian, 2020). It will be interesting to see how this development will be received in the market. Does Spotify tolerate artist advertising on their albums? Do consumers accept it when there is advertising on the albums they are listening, even though they are paying for a advertising free Spotify? Which individuals or companies would like to pay for such advertising space and how much money can be earned with this?
Even though the modern streaming platforms, such as Spotify, have been positively received by consumers, artist are not yet satisfied by the compensation provided. While streaming can be considered as the new dominant way for music consumption, the market has not yet completely adapted to the development and it will be interesting to see which developments will continue to arise in the effort of artists to successfully monetize their content.

The new advertising in the music industry?

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