Streaming Payouts: Artist-Centric VS Pro Rata
How do artists get paid from streaming, and why does it matter?
In music streaming, there has been an ongoing debate about how artists are compensated for their work. Two main models have emerged: Artist Centric and Pro Rata. This blog post will explore these two payout systems and discuss their implications for artists.
Pro Rata Payouts: A Share of the Pie
Pro Rata model is the most widely used model currently. It distributes streaming revenue based on the total number of streams on the platform. In this system, the revenue is divided among all artists based on their share of the total streams. This means that popular artists with a large number of streams will receive a significant portion of the revenue, while less popular artists will receive smaller payouts.
While this model distributes funds fairly based on streams, it leaves the listener in a pinch. Their subscription cost mostly pays for the high earnings of artists they might not be listening to. In this model, artist fans aren’t directly impacting the artists they listen to.
Artist Centric Payouts: Putting Artists First
In the Artist Centric model, the payout is based on an artist's actual streams. This means the revenue generated from a user's subscription or ad-supported stream goes directly to the artists they listened to. It is a system that aims to prioritize and reward individual artists based on their popularity and engagement with listeners.
This model would allow artists to see the impact of growing their audience more directly. Additionally, the listener (the subscriber ) gets a better product, knowing that the artists they are listening to are getting their support.
The Impact on Artists
Artist Centric: Boosting Emerging Artists
The Artist Centric model can be seen as a way to support emerging artists and provide them with a fair share of the revenue. Directly allocating revenue based on individual streams allows lesser-known artists to receive a more substantial payout if their music resonates with listeners.
Pro Rata: Rewarding Established Artists
On the other hand, the Pro Rata model tends to favor established and famous artists who consistently generate high numbers of streams. They receive a more significant portion of the revenue due to their higher stream counts, which can reflect their broader appeal and fan base.
The Debate Moving Forward
The choice between Artist Centric and Pro Rata payouts is a contentious topic within the music industry. Supporters of the Artist Centric model argue that it promotes fairness and provides opportunities for emerging artists. Proponents of the Pro Rata system highlight its simplicity and how it rewards artists based on their overall popularity.
As the streaming landscape continues to evolve, it is crucial to consider the impact of these payout models on artists' livelihoods. Finding a balance that benefits emerging and established artists while ensuring a sustainable music ecosystem is a complex challenge requiring ongoing discussion and exploration.
In conclusion, the choice between Artist Centric and Pro Rata streaming payouts determines how revenue is distributed among artists. Each model has advantages and disadvantages, with implications for artists at different stages of their careers. According to the statistics, the Pro Rata model generates slightly higher payouts for artists. However, it is essential to note that these figures may vary depending on the streaming platform and individual artist contracts.
Ultimately, finding a fair and sustainable solution that supports the diversity and creativity of the music industry remains a critical goal.
