Spotify is Making Big Changes to Who Gets Paid
Spotify recently announced upcoming changes to its royalty model that are expected to impact the music streaming platform significantly. These changes aim to direct more money towards popular artists and record labels while addressing issues such as artificial streaming and small payments not reaching artists.
One of the critical aspects of the new policy is the increase in the minimum payment threshold for music streaming. Starting in 2024, tracks will need to reach a minimum of 1,000 streams in the past 12 months in order to generate royalties. This change is intended to ensure that only tracks with a certain level of popularity are eligible for royalties, thus allowing Spotify to allocate its resources better.
Who Does This Help?
Spotify claims this change will not result in additional revenue for them. The company clarified that there will be no change to the size of the music royalty pool being paid out to rights holders. Instead, the tens of millions of dollars that would have been spread out into $0.003 payments will now be used to increase the payments to all eligible tracks. This means that emerging and popular artists will benefit from this redistribution of funds, while smaller artists will stop being paid.
Artificial Streaming and Gaming the System
Another issue that Spotify aims to address with these changes is the problem of artificial streaming. To deter this practice, Spotify will start charging labels and distributors per track when artificial streaming is detected on their content. By imposing this financial penalty, Spotify hopes to discourage people from uploading content to boost its streaming numbers artificially.
In addition, Spotify will also crack down on those attempting to "game the system with noise." The platform will increase the minimum track length for functional noise recordings, such as white noise and nature sounds, to two minutes for them to be eligible to generate royalties. This change aims to prevent individuals from cutting their tracks artificially short to maximize their royalty-bearing streams. Spotify believes this will ensure a fairer distribution of royalties and prevent system abuse.
These changes to Spotify's royalty model are expected to generate approximately $1 billion in revenue for artists meeting the threshold over the next five years. In theory, by addressing issues such as artificial streaming and better distributing small payments, Spotify aims to create a more equitable and sustainable platform for musicians and content creators.
