The way streaming platforms distribute royalties to artists is one of the most consequential and least understood structural issues in the music industry. The current dominant model—pro-rata distribution—determines how billions of dollars flow from listeners to rights holders each month. An alternative model—user-centric payment—has been debated for years and is now being tested in real-world conditions. The difference between the two is not merely technical. It has the potential to redistribute hundreds of millions of dollars annually between different types of artists.
How Pro-Rata Works
Under the pro-rata model (used by Spotify, Apple Music, and most major platforms), all subscription revenue is pooled together each month. The total pool is then divided based on each recording's share of total global streams. If a song receives 0.001 percent of all streams globally in a given month, it receives 0.001 percent of the royalty pool.
This means that your individual subscription payment does not go to the artists you listen to. Your $10.99 goes into a pool with everyone else's $10.99, and the distribution is based on market share. A subscriber who listens exclusively to indie folk is inadvertently subsidizing the royalty payments of mainstream pop artists who command the largest share of total streams.
How User-Centric Works
Under a user-centric model, each subscriber's payment is distributed based solely on their individual listening patterns. If you pay $10.99 and listen exclusively to five artists, the royalty portion of your subscription is divided among those five artists (after the platform's cut). Your money goes to the artists you actually listen to.
The conceptual appeal is obvious: user-centric distribution feels fairer and more intuitive. It eliminates the cross-subsidy effect and creates a direct economic link between a listener and the artists they support. An artist with a small but dedicated fan base would receive a proportionally larger share of each fan's subscription payment.
Who Wins, Who Loses
The redistribution effect of switching from pro-rata to user-centric is significant but nuanced. Studies from CNRS (France's national research center) and Deezer's real-world testing suggest that user-centric distribution would benefit mid-tier and niche artists—those with dedicated fan bases who listen repeatedly—at the expense of viral hits and background-music playlists.
Specifically, genres like jazz, classical, metal, and niche electronic music would see income increases of 5 to 15 percent under user-centric distribution. Mainstream pop, hip-hop mega-hits, and ambient background playlists would see corresponding decreases. The artists most negatively affected would be those whose streams come disproportionately from casual listeners and playlist-driven consumption rather than intentional, repeated listening.
The Implementation Challenge
Despite its conceptual appeal, user-centric distribution faces significant implementation barriers. The accounting complexity increases dramatically: instead of calculating one market-share-based distribution, platforms must calculate millions of individual distributions—one per subscriber—each month. This requires substantially more computational infrastructure and creates opportunities for accounting errors.
There are also concerns about gaming. Under user-centric distribution, a single subscriber who listens to one artist exclusively routes their entire royalty share to that artist. This creates incentives for artists to encourage fans to leave their music on repeat 24/7, even during sleep—a practice that already occurs under pro-rata but would have a larger per-fan impact under user-centric.
The Current Landscape
Deezer became the first major platform to implement a modified user-centric model in 2024, though with adjustments that blend user-centric and pro-rata elements. SoundCloud has also experimented with fan-powered royalties, its version of user-centric payment. Spotify has publicly discussed user-centric models but has not committed to implementation, citing complexity and the relatively modest redistribution effects shown in simulations.
The debate is not purely economic—it is ideological. User-centric distribution aligns with a vision of the music industry where direct fan-artist relationships are the primary economic driver. Pro-rata distribution aligns with a vision where the market as a whole determines value. The streaming payout model that prevails will shape the economic incentives for every artist, label, and distributor in the industry.
About the Author
Digital Strategy Editor
Digital marketing strategist with deep expertise in playlist strategy, algorithmic discovery, and merchandise brand development.
7+ years experience · Former Head of Digital Marketing, Mid-Major Label · 6 articles on Like Hot Cakes
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