Where the Money Goes When You Stream a Song
The recorded music business spent the 2000s in freefall — piracy and the collapse of CD sales roughly halved global revenues — and has spent the years since 2015 climbing back out. The IFPI, the industry's global trade body, reported in its Global Music Report that worldwide recorded-music revenues reached US$29.6 billion in 2024, the tenth consecutive year of growth, with streaming accounting for over two-thirds of the total.
That recovery is one of the more remarkable turnarounds in media history, and it rests almost entirely on a behavioural change: hundreds of millions of people agreeing to pay a monthly fee for access to essentially all music ever recorded. Subscription streaming did what two decades of lawsuits against piracy could not — it made paying easier than stealing.
But the system that distributes that money bears no resemblance to the one it replaced. When you buy an album, your money is attached to that artist. When you stream, your subscription fee goes into a pool, and the pool is divided by total plays across the whole service — a model known as pro-rata. Your fee is distributed according to what everyone listened to, not what you listened to. A subscriber who plays one jazz record a month is, in effect, mostly funding whatever topped the global charts.
The sums flowing through this machinery are large. Spotify, the biggest subscription service, says in its annual Loud & Clear transparency report that it paid out more than US$10 billion to the music industry in 2024 alone — the largest annual payment from any single retailer in music history. The report also shows how steep the curve is: tens of thousands of artists generate meaningful royalties, while millions of uploaders earn almost nothing.
Crucially, services do not pay artists directly. Royalties flow to rights holders — record labels for the recording, publishers and collecting societies for the songwriting — and the artist's share depends on their contract. A major-label artist may keep a modest percentage of the recording royalty; an independent artist distributing their own work keeps most of it but starts from a far smaller audience. Songwriters, whose royalties come from a separate and generally smaller pool, have been the loudest critics of the split.
The model is now being renegotiated at the edges. Several services have adopted thresholds under which tracks with negligible plays earn nothing, redirecting that money up the curve; others have experimented with 'artist-centric' schemes that weight payouts toward the acts a listener actually plays. Each change redistributes hundreds of millions of dollars, and each is contested — what looks like cleaning up spam from one angle looks like defunding niche music from another.
Two wild cards hang over the next decade. One is AI-generated music, which can flood services with functionally free content that competes for the same royalty pool — the IFPI now ranks unlicensed AI training and AI-made tracks among the industry's chief concerns. The other is the growth of markets outside the historic core: IFPI's regional data shows some of the fastest revenue growth in Latin America, Africa and Asia, which is already changing what global pop sounds like.
For listeners, none of this complexity is visible — the song simply plays. But the plumbing matters, because it decides which careers are viable. The last era's question was whether recorded music could be saved. It was. This era's question is who the rescue actually pays.
