Big changes are coming to Spotify’s royalty model, according Music business around the world (MBW). If implemented in early 2024, they will raise the bar for who gets paid for streaming music on the platform and direct more money to major labels and artists.
Two of the three proposed changes should be relatively uncontroversial. According to the report, Spotify will fine music distributors (including labels) for fraudulent activity detected on their tracks. Streaming fraud is quite widespread, and an offensive is long overdue. The second change will increase the minimum playback duration for tracks with noise (background noise like rain, static, etc.) before they start earning royalties. Currently, any track that plays longer than 30 seconds starts earning royalties, and many noise makers have gamed the system by breaking noise down into short (even 31-second) tracks. MBWThe report did not specify how long the new low would last.
The biggest reported change, and the one that’s already drawing criticism, is a minimum threshold of annual streams for a track before it starts earning royalties. In this scenario, a track would have to earn 5 cents per month to be paid or, as MBW It is estimated about 200 currents per year. Many independent tracks don’t meet this threshold, so the pennies those artists would otherwise earn will be diverted to Spotify’s “streamshare” fund. It may not seem like a lot of money, but a source said MBW which, when multiplied by the many, many low-play tracks on the streamer, represents tens of millions of dollars. Instead, that would be distributed to bigger artists, who would get a larger share of the pooled money.
Other streamers have attempted to overhaul their royalty models lately, and with wildly different approaches. SoundCloud, which is specifically aimed at independent artists, introduced a user-centric model, which distributes payments based on the number of streams rather than the artist’s share of overall listening. Deezer made waves last month when it struck a deal with Universal Music Group to pay popular artists more than independent creators in a way that’s even more open than what Spotify is trying to do. But as the world’s most popular music streamer, Spotify’s decisions carry more weight.
The argument in favor of Spotify’s strategy is that many of these micropayments get trapped in the distribution channel and rarely reach artists’ pockets anyway. And Spotify wouldn’t be the first streamer to put a minimum on monetization. youtube creators They can only start making money through ads once they accumulate 1,000 subscribers and 4,000 viewing hours over the course of a year. But critics say the company is doing the opposite of Robin Hood, taking from the humblest independent artists and giving their profits to the biggest ones.
“Right now, streams and revenue are effectively synonymous, but this time next year they will mean very different things,” he wrote. Mark Mulligan, music industry analyst. He argues that, in this new system, smaller artists “will be excluded and their income will become a new black box that larger artists will be able to share among themselves.”
There is also an entire industry built around DIY artists based on the promise that they will be paid for their work. Platforms like Tunecore, DistroKid and CD Baby may have a harder time selling if the world’s No. 1 music streamer has raised the bar on who gets paid.
Spotify has not yet confirmed these plans. “We are always evaluating how we can best serve artists and regularly discuss with partners ways to promote the integrity of the platform,” Spotify spokesperson Chris Macowski said in a statement to The edge. “We do not have any news to share at this time.”
