The ways in which music streaming royalties are paid can be confusing even to seasoned industry insiders, and formulas vary from company to company, as we’ll see later in this section. However, the vast majority of streaming service companies adhere to a licensing model called “service-centric” or “pro-rata.”
In a pro-rata/service-centric system, monthly royalties are determined by taking the total revenue generated by a streaming service, dividing that number by the overall number of streams during that month for all artists, and multiplying it by a specific artist’s number monthly of streams.
In other words, the monthly revenue for an artist depends on his/her share of the streaming company’s overall streams. For example, if artist “X” had 100 streams in 1 month, and streaming company “Y” reported 1,000 total streams in the same time period, then, under the pro-rata system, artist “X” will get paid 10% of the company’s overall monthly revenue.
Consumersadvocate.org spent over 200 hours researching 25 different music streaming services, and this is what they discovered artists could earn per play. For the full study, click on the graph below.
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