Spotify, Pandora, and iHeart Radio are some of the more popular music streaming services. These companies offer free access to music. For a small monthly fee, users can purchase premium access and listen to millions of songs on demand and ad-free. But not all artists are fans of free streaming music. Taylor Swift's move to prevent Spotify from playing her 2016 release,1989, for free made national headlines. When Spotify refused to restrict access to only paying customers, Swift would not allow the company to play her music for free. She is not alone. Adele, Dr. Dre, Garth Brooks, and Coldplay have all had run-ins with free streaming services.

i. If music-lovers obtain music and video content via free music streaming services instead of buying it directly or paying for premium access, what would the record companies' producer surplus be from music sales?

Producer surplus for record companies would...

a. be greater than if people had to pay for the music.

b. depend on how much music that the company is willing to provide for free.

c. be zero.

ii. What are the implications for record companies' incentive to produce music content in the future?

a. Record companies would face a reduced incentive to produce music content.

b. It is unclear how record companies' incentive to produce music content would change.

c. Record companies would face a greater incentive to produce music content.

d. Record companies would face about the same incentive to produce music content.

iii.If Taylor Swift and other artists were not allowed to pull their music from the free streaming services, what would happen to mutually beneficial transactions (the producing and buying of music) in the future?

a. Mutually beneficial transactions would stay about the same.

b. Mutually beneficial transactions would decrease.

c. Mutually beneficial transactions would increase.

d. It is unclear what would happen to mutually beneficial transactions in the future.