Implementing a user-centric payment model in the music streaming market: a comparative approach based on stream-level data

Overview & Synopsis

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 most discussed model – the “user-centric model.” 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 this model may reallocate revenues across different songs and rightsholders. Our analysis follows a three-step process: First, we examine the relative importance of key user characteristics on revenue reallocation. Second, we connect these key user characteristics to six song characteristics and determine the impact of the model on different types of songs and rightsholders. The third step disentangles the static effects of a transition to the alternative model across each of the six different song characteristics. After this analysis, we contrast the user-centric model with other models proposed by leading music business actors – primarily the so-called artist-centric model.