Alternative payment models in the music streaming market: A comparative approach based on stream-level data

• We study in a comparative static approach the consequences of implementing either a user-centric payment system or an artist-centric payment system in the music streaming market instead of the current “pro-rata” payment system. • We use data provided by a leading music streaming platform in France from >150,000 unique users for one year (890 million streams). • We show that urban music songs, frontline songs (new releases) and songs from both the superstars and the deep tail (least popular artists) would be the most negatively impacted by a user-centric payment system while the changes induced by an artist-centric payment system would be much more limited. Contrary to its objective, an artist-centric payment system does not significantly improve remuneration to professional artists. Music streaming platforms’ models for sharing revenues with content providers have been the subject of intense debate for nearly a decade. The dominating model involves pooling platform revenues and allocating these funds to songs based on a song's share of the total number of platform streams. Since this model has several controversial consequences, alternative models have been proposed. This paper uses a novel approach to assess the two most discussed models – the “user-centric” and the “artist-centric”. Our approach relies on a unique data set of 154,505 streaming platform users (890 million streams) and simulates how a large-scale implementation of these models may reallocate revenues across different songs and rightsholders. We disentangle the static effects of a transition to a “user-centric” or an “artist-centric” model across each of six different song characteristics. We then compare the results of the two models. We show that contrary to its objective, an artist-centric payment system does not significantly improve remuneration to professional artists while the user-centric payment system would generate more significant changes in revenue reallocation, mainly at the expense of Rap & Hip-hop songs, superstars and new releases. Finally, we analyze the positions of the various stakeholders with regard to each of them.