Spotify, the world’s leading music streaming platform, is making significant changes to its royalty model in the coming year. The key element of this overhaul is the introduction of a minimum annual stream count of 1,000 plays for tracks to earn streaming royalties. This move has stirred a mix of reactions, with Spotify aiming to address low-value payouts while raising concerns about its impact on emerging artists.
A Higher Bar for Royalties: In a recent report by Music Business Worldwide (MBW), it was revealed that Spotify’s new requirement raises the bar for tracks to generate royalties. Initially, MBW predicted a much lower threshold of about 200 plays for tracks to start earning royalties. However, Spotify has opted for a 1,000-play minimum, a significantly higher mark.
The Monetization Challenge: Spotify’s reasoning behind this change is to address a specific issue. According to the platform, this new rule is meant to “demonetize a population of tracks that today, on average, earn less than five cents per month.” Currently, without the 1,000-play requirement, tracks can generate five cents in royalties on Spotify in the U.S. with approximately 200 plays.
The Expected Impact: Spotify has reportedly informed industry insiders that only 0.5 percent of tracks on the platform fail to meet the 1,000-play requirement. By implementing this change, Spotify plans to reallocate tens of millions of dollars each year to the remaining 99.5 percent of artists in its “Streamshare” royalty pool. The company estimates that this reallocation will reach nearly $40 million by 2024.
Supporting Voices: Kristin Graiziani, the President of music distribution platform Stem, sees Spotify’s new royalty model as a positive development for artists. In a guest column on Consequence, she argued that this change is likely to benefit artists by focusing royalties on tracks that receive meaningful attention.
Critics’ Concerns: However, not everyone is on board with this new approach. Denis Ladegaillerie, CEO of Believe Music, the parent company of music distributor TuneCore, expressed reservations in a podcast interview with MBW. He asked, “Why would you not pay such an artist for getting less than 1,000 streams? It doesn’t make any sense. What signal as a music industry do you send to aspiring artists if you go in that direction?”
Conclusion: Spotify’s upcoming royalty overhaul, particularly the introduction of the 1,000-play requirement, is poised to bring significant changes to how artists earn money on the platform. While Spotify believes this change will address low-value payouts, it has raised concerns among some industry players who worry about its potential impact on emerging and niche artists. As the music streaming landscape continues to evolve, the debate over fair compensation for artists remains at the forefront, and Spotify’s actions are sure to play a pivotal role in shaping this ongoing discussion.
ON/OFF: Spotify, Editorials, Music
