How do Streaming Services Pay Artists?

Streaming Services

Streaming services have increased in popularity in recent years; with popular services like Spotify, Apple Music, Tidal and others. 

These services are known “digitally interactive” because users can choose what they want to listen to. Generally, streaming services generate revenue either through (1) paid subscriptions by users or (2) advertising revenues. For example, people can listen for free on Pandora, but their listening will be interrupted by Ads. On the other hand, if you pay for a Pandora subscription, you are given Ad free listening. 

Each streaming service has a different way of calculating how much artists are paid. The most common way artists are paid via streaming services involves the use of a “pro-rata” or “user-centric” formula.

A pro- rata formula calculates the monthly royalty payment to each individual artist by taking the streaming company’s overall revenue for that given month, dividing it by the overall number of streams by all the artists on that platform, and then multiplying the resulting number by that specific individual artists’ total streams for the month. This is the formula used by Spotify, Apple Music, and most other major streaming service providers. 

The User-Centric formula calculates the monthly royalty payment to each individual artist based on each individual subscriber’s listening consumption in that given month. For example, if you pay a subscription fee of $10.00 per month for a streaming platform and in January only listen to Bad Bunny, then 100% of your subscription fee for that month will go to Bad Bunny and is not shared with other artists. 

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

Share this post

Silvino Diaz

Silvino E. Diaz’s practice ranges from Civil and Commercial Litigation to Entertainment and Intellectual Property Law. Silvino has earned a reputation as one of Puerto Rico’s foremost advocates for independent musicians and artists. As a result of his sustained commitment to creative industries, he was named Professor of Intellectual Property Law at Atlantic University College (Guaynabo, PR) – the Caribbean’s leading digital arts institution – where he spearheaded the “Introduction to IP” course for both the graduate and undergraduate programs, and was appointed by the Office of the President to develop an Intellectual Property graduate curriculum, where he served until moving to Miami in 2017. He is the founder of the service known as Starving Artists, where he offers innovative business and legal counsel for artists and creatives.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *



Contact Us

"*" indicates required fields