In recent months, record labels—both major and independent—have been calling for streaming platforms to raise their payout rates. As streaming continues to dominate how consumers listen to music, labels argue that the current financial model has not kept up with inflation.
Streaming now accounts for more than 80% of recorded music revenue, yet the per-stream payouts to rights holders remain fractions of a cent. Labels say that while streaming platforms continue to grow, attract large investments, and expand into podcasts and video content, musicians and labels are receiving small returns. This widening gap has reignited long-standing concerns about how streaming royalties are calculated and shared.
One key issue is the pro-rata model, where all subscription revenue is pooled together and distributed based on total streams across the platform. Labels argue this system favors high-volume genres and massive playlists while underpaying emerging artists and niche creators. Many companies are pushing for a user-centric payment model, where each subscriber’s fee is divided only among the artists they personally listen to. Supporters say this model would more accurately reflect fan influence and provide fairer compensation.
Some major streaming services have raised prices slightly in the past year, but industry leaders claim the changes barely scratch the surface. They argue that streaming subscriptions are less expensive than many other entertainment services, despite music being one of the most consumed media formats. With inflation impacting all areas of production, labels say increased subscription fees are necessary to ensure artists can earn a living wage.
Furthermore, as artificial intelligence-produced music begins appearing on streaming platforms, labels worry that the revenue could be diluted even further.
While streaming services acknowledge the concerns, they believe that if subscription prices rise too sharply, it could slow subscriber growth or push listeners to free tiers and piracy. They also note that they already pay out billions annually to rights holders, suggesting the entire music pipeline must work together to find solutions.
Still, the pressure from labels is growing, and many expect a shift in the streaming economy. Whether through increased subscription fees, revised royalty structures, or new payout models, the music industry is pushing for a system that better reflects the true value of recorded music—and ensures the people who create it are properly compensated.
As negotiations continue, one thing is clear: the conversation around streaming payouts is far from over, and the next few years could change the financial future of the music business.