Streaming services have drastically altered the way we consume music. Luminate reports that on-demand audio streams boasted a whopping 83.2% of total shares of album-equivalent consumption by format in 2022. For better or worse, the internet era of music consumption is here to stay.
While streaming services have made the lives of consumers easier, artists are still struggling to be compensated fairly. In an email sent to Universal Music Group’s global staff, Chairman and CEO Sir Lucian Grange addressed the need for streaming service evolution. He says “There is a growing disconnect between, on the one hand, the devotion to those artists whom fans value and seek to support and, on the other, the way subscription fees are paid by the platform. Under the current model, the critical contributions of too many artists, as well as the engagement of too many fans, are undervalued.” He goes on to express the need for an updated model that is inherently artist-centric.
The current pro-rata payment model, in short, prioritizes and rewards the largest artists in the game and is currently used by most streaming platforms, including Spotify and Apple, the two largest ones. It pools all the money garnered by the monthly subscription fees, which hover around $9.99-$10.99, and divides it by the total number of streams on the platform. This, in turn, identifies a ‘per stream rate’ which is then multiplied by each song’s number of streams to determine artist payout. To illustrate, Miley Cyrus’s latest single has accumulated more streams than your favorite shoegaze indie-rock garage band (just a guess); therefore, your subscription dollars will go towards Miley, even if you never listen to her.
Fans want to support the artists that they love; they’re fans for a reason! Many industry voices urge for a change to a user-centric model. This system, as opposed to the pro-rata model, takes a percentage of each subscriber’s fees and pays it out only to the artists that user listens to. (Point for shoegaze garage band!).
Impala, an independent music companies association, has created an infographic hosting a ten-point-plan on ways to reform streaming into a more equitable system. It provides four new-and-improved streaming payment models other than the user-centric model.
First up is the active engagement model, which attaches a premium royalty value to plays where the listener has actively searched for a particular track or artist. The same would happen if the user were to save or pre-order a record. For example, Spotify algorithmically serves listeners lean-back plays that it believes the user will like. The active engagement model would account for this, and in turn, increase rewards to artists the user has specifically gone out in search of.
The second model is called the pro-rata temporis model. There is a difference between listening to the first 30 seconds of a song and listening to the entire 9 minutes and 7 seconds of Lynyrd Skynyrd’s “Free Bird”—this model addresses that value discrepancy. The pro-rata temporis model pays out more money for listens of longer tracks than shorter tracks. At the 30 second mark of any song a royalty rate is rewarded, but this model would give further payments triggered at 5 minute intervals within a single track, up to 15 minutes and 30 seconds. It would reward songs that garner a user’s attention the whole way through, thus giving true fans a sense of pride in supporting their favorite artists by listening to the full tracks.
Then there is the artist growth model, which I find the least likely to catch on. It proposes that the more streams and wealth an artist accumulates, the less incremental value each further stream will generate. Thus, smaller and more niche artists would generate a bit more per stream than top artists in order to accelerate their own growth and popularity. While this would support emerging artists in a significant manner, streaming platforms are likely to refrain from peeving larger artists—as it would essentially be biting the hand that feeds them.
The fourth and final proposed model is called the user choice model (not to be confused with the user-centric model from earlier). The user choice model facilitates areas within streaming platforms for artists to gain revenues through implementing direct relationships with fans. This could come in different forms such as offering access to more tracks, better sound quality, or additional remixes. This model would allow the artist to generate more income, in addition to streaming royalties, as well as nourish a more personal relationship with their fans. I find this to be the most approachable and realistic option.
At the end of the day, streaming platforms are a money-orientated business and not music companies. As opposed to us music fanatics who want to see small artists thrive and for our money go to the artists that we like—a corporation’s bottomline is to make money. Truthfully, I’m not sure if there is an inherent strength in numbers when it comes to this debacle, but I am sure that if key players such as Taylor Swift, who is known to ‘fight the man,’ were to make a fuss about this, we’d see more change. There is not yet a perfect solution, but that doesn’t mean there won’t be one day. As for now, do your due-diligence and support your favorite artists by buying their merch at concerts.
Olivia Klindt is a student writer from Nashville, Tennessee. She’s a senior at the University of Georgia studying Psychology and Music Business. Despite not being musically inclined, Olivia has an infatuation for all things music and is transferring that love into writing for Vinyl Magazine! She is a cross-genre fan but classic rock, folk, and country are her favorites. Olivia is excited to dive deeper into the releases, trends, and issues within the state of music today.