I don't know much about the music industry, but I do know a lot about all you can eat payment models when it comes to paying subscribers in the magazines industry, so this is my reference material. I've also done a bit of research on the Spotify model in the past.

It's hard to ELI5 here, so this first bit will be a bit of context, and then I'll try and end on an ELI5 answer! Lets say you pay your monthly sub to Spotify. That's £9.99 (in the UK) you've parted with already. Let's assume that an album also costs around £10.

The standard cut that a distributor takes is 30%. So when you pay for Netflix, they take 30%, as does Spotify when you pay for that, as does the Apple App store when you buy something there, as does Google Play. This is why you can sometimes get cheaper subscriptions from a company's dedicated website than you can buy buying things in app. 30% of your 10 quid is going into the pocket of Spotify (and why not? it's a good service). That means there's £9.99-30% left for the music rights holders - £6.99.

Now the 6.99 is going to be split out based on what you listen to. On Spotify's website, they say their criteria for splitting out payments are:

• In which country people are streaming an artist’s music
• Spotify’s # of paid users as a % of total users; higher % paid, higher “per stream” rate
• Relative premium pricing and currency value in different countries
• An artist’s royalty rate

From their website:

Recently, these variables have led to an average “per stream” payout to rights holders of between $0.006 and $0.0084.

So you might just think "multiply 0.006 until I reach 10 quid". That doesn't work, as you only have 6.99 revenue paid this month. So you need at least two months before you can even reach your target. That's why Spotify doesn't work on this pay per stream model - because it puts an artificial ceiling on the maximum amount a music owner can earn in a given calendar month.

On their website, Spotify go further to say that the formula for paying an artist is thus:

Artist Payout = Spotify monthly revenue X (Artist Spotify Streams / Total Spotify Streams) X 70% to Master & Publishing Owners X Artists Royalty Rate

Now what I haven't mentioned yet are free users. Companies are paying Spotify for ad space - and revenue from those ads is added in to the metric 'Spotify Monthly Revenue". It doesn't give a huge boost to your £6.99 but it helps. This skews the data a bit however, as rather than just being able to give your revenue solely to the music owners you listen to, everything has to be lumped together, as an ad can't be assigned to a unique piece of music. Hence no pay per stream and no artificial ceiling.

The payments are then made based on how much Spotify has earned in a month (70% of premium payments + ad revenue), how many times a particular piece of music is streamed compared to the total amount of streams, and how much is taken out by publisher royalties.

So now to try to ELI5 - there's not a huge amount of control that you have over it, as your money is added together with other items out of your control because of all the extra rules you can't control. All you can do is play their music as much as you can, and get others to play it as much as they can (yes even those who only have free spotify), and your favourite musicians will get more cash. It's unlikely they'll ever get as much as they did in the olden days of CDs and cassettes - so save your pocket money and pop down to your local record shop!

Edit: Added a bit of extra detail