#Listen up: Streaming popular music playlists hurts smaller artists’ revenue

Table of Contents

“#Listen up: Streaming popular music playlists hurts smaller artists’ revenue”

When music fans listen to their favorite album, there’s a certain satisfaction derived from knowing that they paid for the music they love – they’re giving back to the artists who made it.

That’s not the case on music streaming platforms, where artists aren’t paid a fixed fee when you stream their songs or albums. Instead, your subscription fee enters a big pot which is then split between every artist on the platform based on their share of overall streams. You can think of the payment pot as a pie chart: the size of an artist’s slice of revenue is determined by how many streams they get compared with their fellow artists.

This might seem a fair way to distribute music streaming revenue. If Rihanna gets 1% of all streams on Spotify, it’s fair that she is paid 1% of the subscription revenue. But this system, called the pro rata payment model, begins to look unfair when the effects of curated playlists are taken into account.

Popular playlists are streamed repeatedly by millions of people, constituting around a third of all streams on platforms like Spotify – a third of the pro rata pie. Because the third of the streaming pie represented by playlists mostly features the world’s most prominent musicians, the effect of playlists is to enlarge the slices enjoyed by the biggest artists at the expense of smaller artists, who see their tiny slices shrink further.

This uneven playing field was the subject of our recent investigation into playlists on Spotify, conducted with royalty-pricing expert Daniel Antal. We found that playlists don’t just benefit top artists, but the curators of these playlists may unfairly favor such artists, influenced by the negotiating power of the major music labels that manage them.

On demand

Over the last few years, music streaming has become the dominant form of music distribution around the world. Today, streaming makes up over half of global revenue from the selling of recorded music.

Globally, almost four in five listeners use Spotify, Apple Music, Amazon, Tencent, or YouTube. Some of the music that listeners on these platforms come across is the result of a targeted search for a specific artist or an album, but many people choose to simply defer to a playlist of some sort to throw together their musical diet.