Think of your favorite song. Now think of how often you keep change in your pockets. Besides buying a record at retail, on-demand listening used to mean plunking cash money into a special machine called a jukebox. This bulky device, still found at dive bars and themed restaurants, would play your selection based on a combination of letters and numbers. These days, you can dial up music on-demand and on the go from the likes of Spotify, Rhapsody, Google Play, Apple Music and Tidal. These services offer huge catalogs of music, some of them for free, depending on whether a service has an ad-supported tier. This all sounds amazing, but it’s completely reshaped the way artists get paid.
Fully licensed, on-demand streaming (also known as “interactive”) has been around since 2006, when Rhapsody came online. As is often the case with experimental formats, at that point, no one was completely sure how adoption and economics would play out. Some predicted a new golden age for recorded music revenue; this may end up being the case for copyright owners with sizable catalogs (like major labels and some independents), but things look a lot different at the individual creator level. It’s not that the services are not paying out—according to Spotify, they deliver approximately 70 percent of their total earnings to copyright owners, which mirrors the percentages of most download stores—it’s more about deal structures, how pricing works, how it impacts other revenue streams, and how royalties are distributed.