Free response question

IEO past paper: 2025 International Economics Olympiad, open questions

Open Question 4. Songs Make Money The company Songify offers users a subscription for $1 per month, providing unlimited access to a music catalogue of 50 million tracks, with the average track duration being 3 minutes. The average number of paying subscribers is 5 million people, and each user listens to about 300 tracks per month (not necessarily unique tracks). Songify keeps 20% of the subscription revenue for itself and distributes the remaining 80% among musicians, in proportion to the number of times their tracks are played. Mark noticed that beginner musicians often complain about low income from the platform, while popular artists receive substantial sums. Mark launched a project called TrackFactory: "TrackFactory is a unique music label that helps lesser-known performers increase their income on the Songify platform. We handle all aspects of music promotion, guaranteeing artists stable and high payouts even with a small number of listeners." The first clients of TrackFactory noticed that, indeed, even though their recognition did not grow, their monthly income on the platform increased significantly. However, Songify's security service soon noticed strange activity of some TrackFactory artists, and their accounts were blocked for "dishonest use of the platform".