Spotify has revealed upcoming changes to its royalty model
In a groundbreaking move, that are set to generate a staggering $1 billion for both new and popular artists within the next five years. The streaming giant aims to direct a more significant share of revenue to artists and record labels, simultaneously raising the bar for minimum payment thresholds and taking a decisive stance against streaming fraud.
Addressing the impending changes in a recent blog post, Spotify emphasized the importance of combating artificial streaming, rectifying inadequate payments reaching artists, and thwarting attempts to manipulate the system with noise
“While these issues impact only a small percentage of total streams, tackling them head-on allows us to channel approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years,” Spotify explained.
The revised minimum payment threshold dictates that tracks must amass at least 1,000 streams in the past 12 months to start generating royalties from next year onward. Crucially, Spotify assures that this adjustment will not increase the company’s profits; instead, the tens of millions of dollars involved will be redirected to elevate payments for all eligible tracks, steering away from the previous practice of distributing meager $0.03 payments.
With a catalog exceeding 100 million tracks, Spotify disclosed that tens of millions have accumulated between 1 and 1,000 streams over the past year, yielding an average monthly payment of $0.03.
Spotify shed light on the issue of small payments being overlooked due to withdrawal restrictions and transaction fees, resulting in uploaders missing out on their earnings. By consolidating these often-neglected payments, which amount to $40 million annually, Spotify aims to bolster support for artists heavily reliant on streaming revenue.
Highlighting that 99.5% of all streams involve tracks with at least 1,000 annual streams, asserts that each of these tracks will see increased earnings under the revamped policy
In a bid to eliminate strategies used to manipulate the system, Spotify contends that the new policy will curb the ability of uploaders to “generate pennies from an extremely high volume of tracks.” This move aims to discourage artificial streaming by introducing charges for labels and distributors per track when such activities are detected
Furthermore, Spotify is tightening its grip on those attempting to “game the system with noise.” The minimum track length for functional noise recordings, such as white noise and nature sounds, will be increased to two minutes to be eligible for generating royalties. This change is intended to counteract deceptive practices, such as artificially shortening tracks to maximize royalty-bearing streams.
By instituting a minimum track length, Spotify anticipates a reduction in earnings for this type of content, reallocating funds back into the royalty pool for artists who rely on streaming revenue, creating a fairer and more sustainable ecosystem for the music industry.
