The basic problem is that Spotify and other streaming services are trying to license music using a set of arcane procedures and institutions that, in some cases, haven’t changed in a century, to use on a platform that didn’t exist even a few years ago. While it is difficult to understand the full details of this system, it is easy to understand that it is a mess. Given that streaming services now account for more than 60% of music revenues and digital downloads account for another 20%, the gap between the highly regulated world of music licensing and the realities of the market will grow increasingly large.
There have been some recent efforts to modernize music licensing. But all too often these efforts fall back on more regulation rather than a greater reliance on market processes. They are just slightly newer choruses of the same old song.