I kind of like a tiered profit sharing system because it blurs the line between popular artists and undiscovered artists. If you're music is of quality and people like it, then it can quickly become popular, and as the artist, there aren't any more contracts to sign, or deals to cut to "get yo money".
I think there will end up being a lot of tiers, but for now we'll refer to two kinds of artists, tier 1 and tier 2. Tier 1 is out of the money, and tier 2 is in the money. Like I mentioned before, this idea could be revised to include tier 1 in the money, but I think the two groups will have slightly different focuses. The primary benefits that tier 1's will be interested in "how can I get people to listen to my music", where as tier 2's will be more interested in "sustaining and growing my popularity".
Once you reach tier 2, you will have a slightly different set of motivations as tier 1's, and I think the system should be designed to appeal to both sets of users. The undiscovered bands vs. the established artists.