One of the most striking aspects of the streaming model is the way in which revenue is distributed. While streaming has democratized music consumption, offering everyone the ability to access vast libraries of music at an affordable price, the financial benefits for the artists themselves are not equally shared. In fact, the majority of the revenue generated by streaming goes to the platforms themselves and the major record labels, leaving a small percentage for the musicians.
For example, in 2021, a study revealed that only 12% of music revenue was earned by the artists, with record labels, publishers, and platforms claiming the rest. Major labels have the infrastructure and promotional muscle to ensure that their artists get millions of streams, which translates to substantial payouts. Independent artists, however, often struggle to achieve the same visibility on platforms like Spotify and Apple Music. As a result, they earn significantly less from streaming.
The disproportionate payout model also highlights the ongoing challenges for independent musicians. Independent artists, who often have to self-manage their careers and create their own marketing strategies, do not have access to the same resources as major label-backed artists. As a result, they often earn very little from streaming, despite their music being just as valuable and deserving of exposure.
One solution that some advocates suggest is a shift from the current “pro-rata” model to a “user-centric” model, where the revenue generated from a listener’s subscription goes directly to the artists they listen to, rather than being pooled and shared among all musicians. This would ensure that artists are compensated more fairly based on the specific audience they are engaging with, rather than the global stream count. While this idea is still in the early stages, it represents a potential pathway for more equitable compensation in the streaming era.
