Revenue Sharing at Music Streaming Platforms.

This article focuses on the problem of allocating revenues from music streaming subscriptions among content providers, specifically analyzing two prevalent methods: the pro rata method, which distributes revenue proportionally to total streams per artist, and the user-centric method, which allocates each user’s subscription fee proportionally among the artists they individually streamed. The authors provide axiomatic and game-theoretical characterizations of these methods, showing that the pro rata and user-centric indices arise as distinct members of a broader family of weighted indices. They further demonstrate that the user-centric method uniquely satisfies key incentive properties—core selection (ensuring no coalition of artists has an incentive to leave the platform), reasonable lower bound (artists receive at least the revenue generated by their listeners), and click-fraud proofness (limiting undue revenue gains from manipulated streaming)—which the pro rata method fails to meet. Additionally, the user-centric index is identified as the intersection of weighted and probabilistic indices, the latter representing allocations where each user’s subscription is probabilistically divided among their streamed artists. The paper concludes that while both methods have normative foundations, the user-centric approach is better aligned with fairness and incentive considerations in the current streaming landscape.