Revenue Sharing at Music Streaming Platforms

We study the problem of sharing the revenues raised from subscriptions to music streaming platforms among content providers. We provide direct, axiomatic, and game-theoretical foundations for two focal (and somewhat polar) methods widely used in practice: pro rata and user centric. The former rewards artists proportionally to their number of total streams. With the latter, each user’s subscription fee is proportionally divided among the artists streamed by that user. We also provide foundations for two families of methods addressing the rising concern in the music industry to explore new streaming models that better align the interests of artists, fans, and streaming services. One of the families offers a natural compromise between the pro rata and user-centric methods. The other family generalizes the user-centric method while capturing various formalizations of incentives for artists and users. This paper was accepted by Manel Baucells, behavioral economics and decision analysis. Funding: This work was supported by Xunta de Galicia [Grant ED431B2022/03] and MCIU/AEI/10.13039/501100011033 and FSE+ [Grants PID2020-113440GBI00, PID2020-115011GB-I00, and PID2023-146364NB-I00].