Legal Insights
The global music industry has undergone significant structural changes over the past three decades. From the perspective of musicians, especially those who worked during the golden age of session recording, there is virtually no industry left. Ironically, however, overall revenues generated by music have increased—reaching over $36 billion in 2024. In contrast, the income received by musicians and songwriters, especially “working” musicians, has substantially declined. This paradox reflects a growing imbalance between industry growth and artist compensation, driven by streaming platforms, evolving royalty systems, and new technological forces such as artificial intelligence.
Grammy-winning drummer and session recording legend Russ Miller points to deeper cultural forces at work. In conversations with the author, Miller described a music business increasingly driven by technology that promotes the unschooled musician, one lacking compositional training or instrumental proficiency, ultimately diminishing both the value of and demand for formally trained musicians. Fellow session legend Vinnie Colaiuta attributes some of the decline to the democratization of recording and distribution. The internet has enabled tens of thousands of independent releases, unlike earlier eras when artists depended on labels to bring their music to market. The result has been a dilution of available revenue. Still, neither of these explanations fully accounts for the fact that major labels continue to post record profits year after year.
From CDs to Streams: How Musicians Lost the Royalty Game
Before the rise of digital platforms, revenue in the music industry was largely derived from physical sales such as CDs and vinyl. Songwriters in the United States earned approximately $0.091 per song per unit sold, allowing successful releases to generate substantial income. Today, streaming services dominate the industry, yet they pay significantly lower rates. Spotify typically pays between $0.003 and $0.005 per stream, meaning one million streams generate only $3,000–$5,000 before any distribution to stakeholders. This shift has drastically reduced the value of individual songs and albums, requiring artists to achieve massive streaming numbers to match historical earnings. Streaming platforms typically allocate about 70% of their revenue to rights holders, but artists receive only a fraction after labels, publishers, and distributors take their share. For instance, while Spotify paid over $10 billion to the music industry in 2024, much of that revenue flowed to labels rather than directly to musicians. Because the amount paid in membership fees to these streaming services by listeners outweighs the amount of money that was historically paid for CDs and albums, the record company profits rise while the artist’s revenue declines. Recent studies have shown that nearly 70%[1] of musicians are dissatisfied with their streaming income.
Why Live Performance Is Now a Musician’s Main Paycheck
As recorded music income has declined, artists increasingly rely on live performances as their primary source of revenue. Earnings, however, vary widely. At the local level, musicians may earn between $50 and $300 per show, a range that has remained the norm for more than thirty years. Top tier artists, by contrast, benefit greatly from touring, and now depend on tour and merchandise revenue as their primary source of income. This marks a reversal from earlier industry models, where live performances mainly served to promote album sales rather than functioning as the main income stream.
Songwriters Are Going Viral — and Still Going Broke
Songwriters have been particularly impacted by the shift to streaming. Previously, they benefited from mechanical royalties tied directly to physical sales. Today, streaming royalties are more fragmented and often significantly lower. For example, viral success on platforms like TikTok generates minimal direct income, with approximately $0.50 earned per 1,000 uses of a song. Although regulatory changes aim to increase songwriter royalty shares to around 15% of streaming revenue, earnings remain significantly lower compared to the pre-digital era.
How AI Is Replacing Musicians — and Erasing Their Income
Beyond the challenges posed by streaming, a new technological force is now reshaping the music industry: artificial intelligence. AI tools can now assist in composition, production, and distribution, making music creation more accessible. These advancements also threaten traditional revenue models as AI-generated music can replace human-created content, eliminating publishing revenue and further reducing demand for licensed works.
Some projections suggest that AI could contribute to a 24%[2] decline in music industry revenues by 2028, further exacerbating financial challenges for artists. Even recording session musicians in musical centers like Nashville have found there is decline in demand for their services as the “demo” pipeline is being replaced with AI backing tracks.
Streaming’s Winner-Takes-Most Problem Is Leaving Most Musicians Behind
The modern music economy has created a “winner-takes-most” system. While more artists can distribute music globally than ever before, only a small percentage generate substantial income. The pro-rata royalty model favors artists with the highest number of streams, leaving niche and independent musicians with minimal earnings. This structure has led to increased competition, reduced per-unit value, and widespread dissatisfaction among artists, despite the continued growth of the overall industry.
Conclusion
The decline in revenue for musicians and songwriters is real but is not due to a shrinking industry but rather a transformation in how income is generated and distributed. The shift from physical sales to streaming, combined with the continued dominance of record labels and the emergence of AI technologies, has significantly altered the economic landscape. Of course, this is not to suggest that the music industry of the past was any more equitable, as that era was similarly exploitative. As Pete Townshend famously observed, “meet the new boss, same as the old boss.”
Although the industry continues to grow, artists and songwriters receive a smaller share of that revenue. Without reforms such as fairer royalty distribution, increased transparency, and stronger protection against AI exploitation, the gap between industry profits and artist earnings is likely to continue widening. There are potential antidotes, if not solutions, but it would involve major changes in the distribution of music, the replacement of label dominance and the introduction of a system where Artists control the rights to their creation. That, however, would require a whole new article.
[1]Yanny Browne, “The Streaming Royalties Debate: Where the Money Goes and Why Artists Are Still Fighting”, CrossFADR, August 13, 2025, https://crossfadr.com/2025/08/13/the-streaming-royalties-debate-where-the-money-goes-and-why-artists-are-still-fighting/.
[2]Aashi Singh, “The Economics of AI in the Music Industry: Impacts, Risks, and Opportunities,” International Journal of High School Research 8, no. 7 (2026), https://doi.org/10.36838/IJHSR87.34.
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