Will these changes help or hurt “working artists?”
BREAKING NEWS concerning Spotify payments:
Spotify has announced three big changes to its royalty model, starting in 2024. Spotify states that the changes are intended to eliminate streaming fraud and ensure money gets to working artists.
There are 3 main changes to Spotify’s royalty model:
- They are introducing a threshold of minimum annual streams before a track will start generating royalties. A track will now have to generate 1,000 streams per year in order to earn revenue.
- Financially penalizing music distributors and labels when fraudulent activity is detected on tracks that they’ve uploaded to Spotify.
- Introducing a minimum length of play-time that each non-music or ‘noise’ track must reach in order to generate royalties.
A little context. Spotify is bombarded with insane amounts of audio spam and as they called it “noise” tracks that clog up the system and devalue the music released by legitimate artists and labels.
To me this is the initial house cleaning needed before meaningful discussion and change can happen that ultimately improve streaming royalty payouts. However, some of the justifications for the 1000 streams rule don’t quite check out.
For instance, Spotify claims the money they used to pay for such small stream counts would end up held by the distributor (and not paid out to the artist), because it didn’t meet the distributor’s payment threshold.
However, that assumes the artist has only released one song, and that the only platform where it sees activity is Spotify. Many artists have dozens of songs in their catalog, and that music is available across numerous platforms. So in total, they’re generating more money than the distributor’s minimum payment threshold. Distributors pay at the account level, not at the track level.
What do you think of these changes?
Does this help reduce the noise that siphons off royalties from working artists, or does it just set the stage to slowly edge out indie artists and get more money to the major labels?
Let me know your thoughts!