The Streaming Royalties Debate: Where the Money Goes and Why Artists Are Still Fighting

Billions Paid Out—But Artists Still Feel Shortchanged

In 2024, Spotify announced it had paid a record $10 billion to the music industry—the largest annual sum ever paid by a single streaming service. More than two-thirds of all streaming revenue, the company says, goes to recording and publishing rights holders. Its annual Loud and Clear report also highlighted a dramatic jump in the number of artists earning between $770 and $10 million annually—triple what it was in 2017.

On paper, these figures paint an optimistic picture—a golden era for music creators. But beneath the surface, survey after survey reveals dissatisfaction. In one European study, nearly 70% of musicians reported being unhappy with their streaming revenue.

The disconnect comes down to how streaming royalties are distributed. Spotify and other platforms don’t pay artists directly for each stream. Instead, they pay rights holders (labels, publishers, distributors), who then pay artists according to the terms of their contracts. For many, that means they see only a small fraction of the revenue their music generates.

Fans think that when they play our song, we get paid for that play,” says an independent singer-songwriter based in Berlin. “But in reality, most of that money never reaches us.

How Streaming Royalties Are Calculated

Most major platforms use the pro-rata model:

• All subscriber and advertising revenue is pooled into one pot each month.
• The pool is divided based on each song’s percentage share of total streams across the platform.

This model has undeniably fueled massive industry growth—from less than $1 billion in global streaming income in 2012 to nearly $20 billion in 2023. But it also comes with controversial side effects:

• Superstars benefit most because they dominate total streams.
• Independent and niche artists lose out, even with highly engaged fanbases.

Alternative models—such as user-centric payouts (where a listener’s subscription fee is paid only to the artists they actually play) or paying more for completed streams over skipped ones—have been proposed, but adoption has been slow.

Recent Royalty Rate Increases: Win or Window Dressing?

There has been movement on royalty increases. In the U.S., the Copyright Royalty Board (CRB) voted to boost songwriter and publisher rates from 10.5% to 15.1% of streaming service revenue by 2027. For webcasting, the Web VI rates will raise per-play payments more than 50% by 2030—a major achievement for artist advocacy groups.

These gains suggest a philosophical shift toward valuing creators in the digital economy. Still, critics argue the increases are modest in real terms given the billions streaming platforms generate annually.

The Policy and Legal Stalemate

Efforts to reform the system often stall in politics and litigation. Proposals like U.S. Representative Rashida Tlaib’s call for a new streaming royalty program have failed to gain momentum. Even the Music Modernization Act, hailed as landmark legislation in 2018, left many challenges unresolved.

Meanwhile, streaming platforms often fight rate hikes in court, warning that higher payouts could mean higher subscription fees for consumers—a claim some economists dispute. For artists, the lack of transparency and slow progress only deepens frustration.

The Human Impact: Artists Still Struggling

Numbers tell part of the story, but the real impact is personal. In 2024, emerging talent lost an estimated $47 million in royalties due to minimum stream thresholds and contractual deductions.

For smaller acts, streaming income often fails to cover basic expenses like studio time or touring costs. Many describe the experience as watching billion-dollar companies profit from their music while they scrape by.

It’s not that we expect millions,” says a Nashville-based producer. “We just want a fairer slice. Artists make the product. Without us, there’s nothing to stream.

Is There a Way Forward?

Potential solutions include:

• User-centric models that pay artists specifically from their listeners’ fees.
• Bonuses for completed streams to reward deeper engagement.
• Greater transparency between rights holders and creators.
• Artist representation in royalty negotiations.

Until major reforms happen, the streaming royalties debate will continue. Rate increases signal progress, but many agree it’s just the first step. The fight for fair pay is ongoing—and for now, it’s being waged one stream at a time.

Final Thought

Streaming has made music more accessible than ever, but not necessarily more sustainable for the people making it. If platforms, labels, policymakers, and artists can’t find common ground, the tension between record-setting industry revenue and real-world artist income will only grow.