MOG's David Hyman explained how the site pays royalties/revenue to artists:
Out of every $10, we pay a (for example) $6 to the label. The [labels] split that $6 amongst themselves based on frequency of plays. So let's say we have 1 million subscribers. So [the label] would get 30% of that $6 million that month. The indie labels get the same deals as major labels. How they negotiate their deals with their artists, I have no idea. I don't know why indies would be different than a major. Maybe because nobody is listening to their music?
Drew Larner, CEO of Rdio, agrees:
I don't pay the artists directly. I have deals with all the major labels and all the major indies, and they have deals with their artists, I have no insight into what their artists are paid because every artist deal is different. One artist may have a huge advance, while one may get different royalties.