Photo Credit: Jessie McCall
The music streaming ecosystem stands at a crossroads, warns the Independent Music Companies Association (IMPALA). While global streaming revenues have soared to $22 billion, underpinned by 800 million premium subscribers, this report warns that these headline figures obscure a deepening divide between major rights holders and the independent sector.
“Combating the Emergence of a Two-Tier Music Streaming Market” highlights this divide and contains a call to action for music professionals. The structure of the streaming market is at risk of entrenching a system that privileges scale over diversity—undermining innovation and the sustainability of independent music.
IMPALA’s analysis was authored by industry expects Dan Fowler and Katherine Bassett, with the report identifying a “widening gulf between large rights holders and independent actors, driven by market consolidation, opaque platform policies, and emerging monetization practices that increasingly favor scale over diversity.”
Key developments accelerating this divide include:
De-monetization Thresholds & Royalty Boosts — Streaming platforms have introduced minimum streaming thresholds and royalty boost mechanisms, purportedly to combat fraud and reward engagement. However, these measures disproportionately strip revenue from independent labels, niche genres, and non-English or regional repertoire. In some cases, well-known indie labels have seen up to 70% of their catalog de-monetized overnight—with lost royalties going into the pockets of larger rights holders.
Pay-For-Play Tools — Spotify’s Discovery Mode and similar features extract revenue from artists in exchange for algorithmic playlist boosts, but with little transparency or evidence of the efficacy. These tools are primarily marketed to independents, raising concerns about unequal access and the creation of ‘table stakes’ for visibility.
Technology-Driven Pressures — The explosion of generative AI music and persistent streaming fraud threaten to dilute royalty pools and devalue human creativity. Oversupply, incentivized by low barriers to entry and volume uploads, further weakens the market position of legitimate creators.
Market Consolidation — Major labels’ acquisitions of independent distributors and catalogs, alongside deals with digital service providers (DSPs), have increased their leverage over market terms. This consolidation risks reducing investment in new and diverse music—making it harder for independents to break new artists.
The report’s findings are stark—while streaming has the potential to democratize music access—these recent platform and policy changes are delivering the exact opposite. Classical, jazz, regional, and non-English repertoire are particularly hard-hit by de-monetization and algorithmic biases.
For emerging artists, arbitrary thresholds for monetization create friction at the earliest—and must vulnerable—stage of their careers, compounding the challenges of rising costs and competition for attention. The lack of transparency from DSPs compounds this problem. Without granular data on how thresholds and play-boosting schemes affect revenue flows, independents are left to navigate an opaque system where the largest players reap the greatest rewards.
Industry Scorecard: Regression on KPIs
IMPALA benchmarks the industry’s progress against its 10-point plan for streaming reform. While there has been partial progress on subscription pricing and environmental sustainability, the report finds regression in support for diverse and local repertoire, market transparency, and equitable access for independents.
Current royalty distribution models, platform policies, and market structures increasingly favor established catalogs and major labels interests over innovation and diversity. To address the risks of a two-tiered market, IMPALA recommends urgent action in five key areas. They include:
- Combat AI dilution and streaming fraud through cross-industry collaboration and regulation.
- Reform royalty distribution models to ensure fair access for all market participants and increase subscription fees in line with inflation.
- Enhance transparency in DSP practices, particularly around play-boosting tools and content de-monetization.
- Restrict and reverse market consolidation to maintain competitive diversity.
- Embed consultation and impact assessment into all future industry changes to prevent unintended harm.
IMPALA’s report suggests that unless the streaming ecosystem is rebalanced to support innovation, inclusivity, and sustainable growth, the future of music will be shaped by economic power rather than creative merit. For music professionals, the imperative is to advocate for transparent, equitable, and collaborative reforms from DSPs to ensure that streaming delivers on its promise for all rather than the privileged few.
Content shared from www.digitalmusicnews.com.