Last month, Spotify announced changes to its royalty model for 2024, among other adjustments. The plan involves three major changes in attempts to stop drains on the royalty pool, according to a report from Music Business Worldwide:
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- A minimum number of streams before a track starts earning royalties, which will allegedly demonetize tracks that drained 0.5% of the pool.
- Financially penalizing music distributors and labels when Spotify detects fraudulent activity on tracks.
- A minimum play-time length for non-music noise tracks before they generate royalties.
According to a recent report, the streaming platform has announced more details about the changes, which include the official number of streams a track must reach to generate royalties. Yearly, a track must reach at least 1,000 streams to start earning money from Spotify. According to MBW, the changes are “designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month.”
Spotify reports this new minimum is set to reallocate tens of millions of dollars from the 0.5% of the pool to the majority 99.5% of artists and rightsholders. Allegedly, $40 million would have been previously paid to the 0.5%, but will now be redistributed in 2024.
Tim Ingham of Music Business Worldwide penned a reaction to Spotify’s announcement earlier this month, in which he posited that some up-and-coming artists may get discouraged if the minimum goes up in the coming years. “[I]f that threshold [moves] upwards in the future, to, say 10,000 streams – or 20,000 streams? Who knows,” he wrote. “Stories like this highlight the importance of the music industry’s leading streaming platforms – especially Spotify – striking the right balance between punishing [so-called] ‘garbage’ while leaving the early green shoots of tomorrow’s ‘professional artists’ unharmed.”
Smaller artists and up-and-comers may go a certain amount of time without generating any revenue from Spotify. They may continue like that, depending on whether or not their music takes off, either in the mainstream or within their certain genre or scene. The changes make sense on an economic level, but what about for the artists? Does it benefit someone who is just breaking into the music business? It seems that this new model depends on popularity and success to be able to benefit new artists, which is hard-won and generally fickle.
To quote Jack Antonoff in a recent interview, “The fans are God, what they say goes.” This new Spotify model will continue to benefit larger artists with an established fanbase, but those looking to break into the music business may be in for a period of destitution, as far as royalties go.
Photo by Rick Kern/Getty Images for Spotify
