The Economics of Music Streaming: Impact on Artist Compensation and Industry Structure in the Digital Era

Abstract

The advent of music streaming platforms has radically transformed the music industry landscape, altering traditional revenue models and reshaping artist compensation structures. This study examines the economic implications of the shift from physical and digital sales to streaming-based consumption. Using a mixed-methods approach, we analyze industry data from major streaming platforms, conduct surveys with artists across various genres, and interview industry executives. Our findings reveal a complex picture: while streaming has expanded music accessibility and industry revenues, it has also led to a more concentrated distribution of earnings, with a small percentage of top artists capturing a disproportionate share of streaming revenue. We identify key factors influencing artist compensation, including playlist placement, algorithmic recommendations, and the challenge of converting streams to sustainable income. The study also explores how streaming has affected industry structure, including the evolving roles of record labels, publishers, and emerging intermediaries. We conclude by discussing potential policy interventions and industry initiatives to address disparities in artist compensation and ensure a more equitable digital music ecosystem.