Millions of Streams, Pennies in Pay: The Battle Over Royalties
Streaming platforms such as Apple Music, Spotify, and Amazon Music have transformed how fans consume media. Although these platforms have increased accessibility for consumers, it has also raised concerns about fair compensation for artists, writers, and other creatives.[i] The issue of fair pay is not a novel idea, but the lack of pay in the entertainment industry has continued to prompt strikes, lawsuits, and increasing demands for change.
Subscription-based models have almost entirely replaced traditional sales revenue.[ii] Traditional media formats, including physical sales and box office performance, were predictable. Creatives knew what to expect and understood how the money would be distributed. Now, streaming services have blurred the lines of how compensation is given. Although the topic of royalties has been an ongoing conversation, streaming services have not yet addressed these controversies. In fact, four out of the five Grammy nominees for Songwriter of the Year did not attend this year’s event in protest of the Spotify’s treatment of its artists.[iii]
Disputes over fair pay have led to legal battles and advocacy efforts to reform the current royalty systems. From actor strikes to artists removing their music from streaming platforms, it is clear that reforming the currently royalty structure is necessary.
The Current Royalty Structure
For artists specifically, the number of streams and views are not proportional to their expected compensation. Popular music streaming sites do not pay per stream number, but instead, they use a pro-rata payment system where the net revenue generated from subscriptions is pooled and distributed in proportion to the number of streams received.[iv] Under this system, Spotify’s payments to artists amounts to as little as $.0033 per stream. Apple Music, similarly, pays between $0.006 to $0.008 per stream.[v] In 2024, Spotify announced a slight modification to this structure. The company now categorizes all Premium plans as “bundles” because these subscription packages also include audiobooks. This reclassification allows Spotify to compensate musicians at lower rates than if they were merely standalone music subscriptions.[vi] By categorizing Premimum plans as bundles, Spotify can spread subscription revenue across different content types (such as Audiobooks), reducing the portion attributed to artists.
Artists Speak Out
Most notably, Taylor Swift took action to highlight the broader legal issues concerning artist compensation and fair dealing. In 2014, Swift pulled all her music off Spotify, arguing that “music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.”[vii] A year later, Swift demanded that Apple Music pay artists even during the free trial version of the service.[viii] Beyond Swift, other artists have engaged in public disputes over streaming services. Global pop star Sevdaliza, who has more than 1 million monthly listeners on Spotify, claims that she cannot afford to even take a week off due to the lack of adequate pay from streaming services.[ix] Artists, ranging from household names to emerging songwriters, are expressing their dismay with the current system. Streaming services have felt the pressure to adjust their structures, but fundamental issues continue to persist.
The Future of Streaming Royalties
Streaming platforms continue to dominate the music industry, and the conversation surrounding fair compensation has reached a new turning point. With the concern of AI-generated music flooding platforms, combined with the continued discontent by artists, streaming services are being pressured to prioritize fair compensation models. If these streaming services fail to initiate meaningful change, they risk undermining the essential foundation of these platforms: the creativity and talent of each artist.
[i] Adam Rumanek, Protecting Artists Financially With The Continued Rise of Streaming Platforms, forbes.com (Feb. 16, 2023), https://www.forbes.com/councils/forbesbusinesscouncil/2023/02/16/protecting-artists-financially-with-the-continued-rise-of-streaming-platforms/.
[ii] Akseli Lehtonen, from unit sales to recurring revenue: Selling products on a subscription model, twicecommerce.com, (Jan. 10, 2023), https://www.twicecommerce.com/blog/subscription-model.
[iii] Kristin Robinson, Amy Allen, Jessi Alexander, Edgar Barrera and Jessie Jo Dillon Won’t Attend Spotify’s Songwriter of the Year Grammy Party, billboard.com, (Jan. 9, 2025), https://www.billboard.com/pro/grammy-2025-songwriter-nominees-wont-attend-spotify-songwriter-party/#.
[iv] Meghan O’Donnell, So, How Exactly Do Streaming Services Calculate Royalties? trolley.com, (May 2, 2024), https://trolley.com/learning-center/so-how-exactly-do-streaming-services-calculate-royalties/.
[v] Id.
[vi] Id.
[vii] Jack Linshi, Here’s Why Taylor Swift Puller Her Music From Spotify, time.com, (Nov. 3, 2014), https://time.com/3554468/why-taylor-swift-spotify/.
[viii] Aarti Shahani, Taylor Swift Wins Battle With Apple Over Free Music Streaming, npr.org, (June 22, 2015), https://www.npr.org/2015/06/22/416538103/taylor-swift-wins-battle-with-apple-over-free-music-streaming.
[ix] Chloe Berger, Global pop stay says she can’t afford to take a week of due to how little she gets paid from streaming, fortune.com, (March 6, 2024), https://fortune.com/2024/03/06/apple-music-spotify-pay-per-stream-sevdaliza-james-blake-lauren-jauregui-streaming/.