The Design determines the Behavior
Platforms create incentives which then drive choices. The protocols a platform chooses to implement already encode the final outcomes. If I let you anonymously review products on the internet, we know that the review page is rendered completely useless, where true signal is drowned out by noise. So, then you shift the rules: only verified purchaser can review. Then your adversary pays for purchases and then gets reviews. We always seem surprised when hearing about more and more elaborate schemes to subvert systems. But their fate is already written in their original design.
This is great news for designers like us: we can predict pretty accurately what will happen with specific protocols. So, how do we use this to our advantage?
Let’s look at some examples that are closer to platform problems. Spotify pays royalties to artists based on the number of plays a song gets. If you think more in terms of incentive threats and bad actors the problem is immediate: you can easily create tracks for Spotify and get plays, you will get money. And of course that is what we have: AI generated tracks, that are then listened to by “listener farms” that look like legitimate streams because they listen on actual hardware devices. It is also easy to imagine simple rules to generate human-like behavior, stopping a track at random times and the like.
A brief aside, Vulfpeck took advantage of this system as well. They released a completely silent album that they asked their fans to listen to while they slept. The proceeds from the plays went to financing a free Vulfpeck tour.
You can keep developing different detection approaches and continue to weed out bots. However, your adversary will keep innovating as well. So what is the way out? The bot outcome is inevitable based on the specific design of the payout scheme.
Where is the problem: at its core the issue is that subscription and ad revenue is placed in a pot and then distributed based on plays. There is a fundamental disconnect between what a subscriber pays and what the artist receives they listen to. An example will clarify.
Two subscribers, Alice and Bob, each paying $10 a month. Spotify takes 30% off the top, so $14 goes into the pool.
Alice plays 100 tracks that month, all by Artist A. Bob leaves music running most of the day and plays 1,900, all by Artist B. That is 2,000 streams against a $14 pool, so a stream is worth $0.007.
Artist A takes 100 × $0.007 = $0.70. Artist B takes 1,900 × $0.007 = $13.30.
Alice paid $7 into the pool and $0.70 of it reached the artist she listened to. The remaining $6.30 went to Bob's artist. Alice and Bob paid the same price and Bob directed nineteen times as much money. Under pro rata your say over the pool scales with how much you stream while your payment stays fixed, so light listeners subsidise heavy ones and the money accumulates wherever the volume is.
The fix is to break the pool up. Give each subscriber their own pot and divide it among the artists that subscriber actually played. Artist A gets Alice's $7. Artist B gets Bob's $7. Had Alice split her 100 plays between two artists, they would take $3.50 each. What you pay now goes to who you listened to.
There is no direct connection between the subscription payment and the artist I listened to. Why not have a your subscription payment be distributed only to the artists you listened to? In this world, continuing the example above, my favorite artist will take my entire residual subscription amount, $7. If I had listened to more than one artist we could simply take the fraction of plays each artist got from me and split the $7 that way. Now the value I am getting from the platform is directly compensating the parties responsible for generating the revenue.
As another benefit we prevent the bad outcomes with bots. A bot farm can now only earn its own subscription payments back. It can never access more than what its subscription paid for. Each subscriber pays directly for the artist. There is no cross subsidization of artists.
Taylor Swift gets paid the same way. Under user-centric payouts, a superfan can only give Taylor Swift her own subscription charge. She cannot create a spike in streams that redirects money from other subscribers' pools. The current Spotify model
Is it any wonder then that our the music industry is dominated by a few artists who are literally getting paid by listeners who don’t care about them? It is not an accident, it follows directly from the model. Now let’s be clear. This shift means a total shift in the business of music streaming. A move to user centric payouts means that in equilibrium things will move, the total pool may shift, or artists will drop out. Is this a problem? Does this alter the nature of the music business? Yes, it does and there is a reason Spotify has not changed its model.
