The discussion of how and how much musicians are paid to have their music on streaming services is an important one, and the math has been done somewhat.
The New York Times’ Ben Sisario writes today about Spotify, which celebrates its first birthday this month, and how it pays artists:
For artists, the most imperative, and contested, numbers are Spotify’s royalty rates. Like Pandora, it pays fractions of a cent each time a song is streamed. But while Pandora’s rates are set by federal statute, Spotify — along with Rhapsody and most other “on-demand” services — makes private agreements with labels, and the company has been opaque about how much it pays.
That has not stopped artists and others from cobbling together data and comparing it online. In the most recent example, Ditto Music, a British digital music distributor, noted that streams to paying subscribers pay three times as much as those to nonpaying users (1.53 cents versus 0.51 cents). But that number most likely represents only what Spotify pays record labels, which then pay another fraction to artists under the terms of their contracts. (The major labels, along with Merlin, a group that negotiates on behalf of idie labels, own a minority stake in Spotify.)
And not all record labels are on board with Spotify either. This Wired post from November of 2011 shows why a distributor for more than 200 record labels pulled music from the service.