Drew Gooden’s The Music Industry is Broken video is the best breakdown of how Spotify and other music streaming services pay artists so poorly, and why AI makes an already bad situation even worse.
Spotify doesn’t pay a per-stream rate. It pays by streamshare: a fixed monthly pool of subscription revenue, divided according to each rightsholder’s proportion of total streams.
Every new track added is another claimant on the same money. Flood the catalog with cheap functional tracks or AI-generated filler, and individual artists' payouts shrink even if their own stream counts hold steady.
Well, unfortunately, that means that at the end of the month, about 99% of your subscription revenue has contributed to a bunch of anonymous, faceless stock music that you weren’t even awake to hear. And the remaining 12 cents goes to your favorite band.
The money flows toward whoever controls the volume: major labels, playlist curators, Spotify’s own commissioned content. Spotify’s margin improves because the filler costs almost nothing to license.
But that’s not it. Introducing: Discovery Mode. Artists can pay for visibility on the same platform that just diluted their payout. The fee is a 30% royalty cut. Spotify created the problem to sell the solution.