We both pay $10 a month. This month, I listen to 99 songs from a single artist, and you listen to one song total. $9.90 of my money goes to my artist, and $0.10 goes to your artist. $9.90 of your money goes to my artist, and $0.10 goes to your artist

$10 of my money goes to Spotify, and $10 of your money goes to Spotify. Then Spotify pays artists based (somehow) on how many times their songs played.

$19.80 goes to one artist, and $0.20 to the other. 99:1.

edit: Maybe what you're getting at is that the person who listened to only one song should pay 99x less. Then it really would be pay-per-play. But Spotify is a subscription service. What else should they do with my extra $9.90? Send it all to the one artist? That would be interesting... but then what if I don't listen to any songs in the month? Bank it and send it to the spread for the following month?

I think the more important point here is that the popular artists supported by big labels become black holes, sucking in all the money. It doesn't matter that you, and all your friends, and all your friends' friends, all listen to the same 3 niche artists day in, day out - approximately all of yours and theirs money will go to some pop artists none of you ever listen to, simply because that's what a much larger general population listens to.

So, it's like 99:1 ratio, but 99 side is Lady Gaga and friends, and 1 is all the indies and niche artist around the world together.

This exactly.

Before streaming with pro-rata royalties, when you bought a record, some money went to the artist of the record (after distribution cuts etc).

Of course Spotify doesn't care. They have to give up 70% of their revenue anyway. But the distribution of this money is the important part and of course pro-rata benefits big labels who have control over the catalog on Spotify and are shareholders.