Now, songs will need at least 1000 streams to earn royalties on Spotify.
After weeks of rumors, Spotify officially announced a significant change to how its royalty system works on Tuesday, bringing several new policies that the company hopes will help it combat fraud as well as the volume of content that now lives on the streaming platform.
“ As Spotify’s payments to the music industry continue to grow (over $40 billion), we want to make sure this money goes to those our platform was designed for: emerging and professional artistssaid Spotify. However, as Spotify’s copyright pool and catalog have grown, three particular sources of copyright loss have reached a critical point. We are therefore working closely with our industry partners (artist distributors, independent labels, major labels, label distributors, artists and their teams) to introduce new policies aimed at (1) further discouraging artificial streaming, ( 2) better distribute small payments that don’t reach artists, and (3) curb those who try to game the system by making noise. »
In particular, from the beginning of next year, Spotify will introduce a payment threshold: songs will have to reach at least 1,000 plays before they can generate royalties. According to Spotify data, of the 100 million songs on the platform, only 37.5 million have more than 1,000 plays, meaning that more than 60% of all songs on Spotify do not reach this threshold. . But these tracks represent less than 1% of all streams on Spotify, reflecting the high volume of tracks that don’t get many plays.
Since news of this change broke, independent musicians have been worried about seeing their little piece of the pie dwindle. While streaming has largely saved the recording industry, which struggled for years after digital downloads dented traditional sales, many artists still can’t rely on streaming revenue, and artists consider that adding another barrier is harmful.
Some, like Damon Krukowski of the indie band Damon and Naomi, have criticized the new policy as a move to take revenue from their songs and give it to smaller, bigger artists. “ This is estimated to result in a transfer of $40-46 million per year from artists like Damon & Naomi to artists like Ed Sheeran,” Damon Krukowski tweeted.
This will move an estimated $40-$46 million annually from artists like Damon & Naomi to artists like Ed Sheeran. Spotify will tell you it’s not about artists you know. Why would you believe them
— Damon K 🎤 (@dada_drummer) November 21, 2023
As the industry has shifted to streaming and $11 a month (or nothing at all for an ad-supported subscription) gives users access to more songs than they can imagine, a An individual stream is worth less than a traditional sale, and fewer than 1,000 streams in a year represent a few euros at best. Spotify claims that affected songs earn 3 cents per month on average. And since music distributors often require a minimum withdrawal amount, some of these payments wouldn’t have been accessible anyway.
Individually, these small payments seem insignificant, but Spotify said it amounts to about $40 million that the company says it can distribute among songs that meet the threshold. Although the most streamed songs represent a minority of tracks on the platform, they also account for 99.5% of all streams on the service, Spotify noted.
In addition to increasing payouts for top-grossing songs, Spotify is adopting this new system in an effort to discourage the streaming fraud strategy of uploading a large number of tracks and cashing out the low income of each of them.
Spotify also announced that it would start charging record labels and music distributors for “ blatantly artificial streaming », by establishing a penalty for each fraudulent title detected. Spotify also indicated that it was increasing the minimum length of music tracks by two minutes. functional “, such as white noise, so that they are eligible for payment of royalties, in order to eliminate ” the perverse incentive to artificially shorten pieces of no artistic value, to the detriment of the listener’s experience “.
“ These policies will resize the income opportunity for those who pollute the platformSpotify said. Currently, the opportunity is so great that some are flooding streaming services with recordings of undifferentiated noise, hoping to attract enough search traffic to generate royalties. »
