As previously reported, Spotify announced last month that it plans on implementing some big changes in the first quarter of 2024 — including lowering its already famously dismal royalty rates for less-popular artists.
Among the changes will be the introduction of a new minimum annual streams threshold of 1,000 plays, which must be hit in order for tracks to start generating money. The news was confirmed by Music Business Worldwide, who also verified that the streaming giant's bottom-line messaging to labels and distributors remains that the move is "designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month."
At current rates, five cents is generated at around 200 plays. (By that same standard, 1,000 streams gets you, at most, $3.00.) Spotify believes that implementing this regulation will de-monetize a portion of tracks that previously absorbed 0.5 percent of the service's royalty pool — thus relocating tens of millions of dollars annually to the other 99.5 percent of the pool, expected to move an estimated $40 million that would have been paid to tracks with fewer than 1,000 streams next year alone.
"This targets those royalty payouts whose value is being destroyed by being turned into fractional payments — pennies or nickels," a source told Music Business Worldwide. "Often, these micro-payments aren't even reaching human beings; aggregators frequently require a minimum level of [paid-out streaming royalties] before they allow indie artists to withdraw the money."
The other two policies included alongside the minimum annual streams threshold are that labels and distributors will be charged a penalty for delivering content responsible for fraudulent streams, and that functional tracks (white noise, etc.) will require a longer minimum play time than music tracks to earn royalties.
"The conversation on increasing payouts is far from over, but right now Spotify is starting to take steps in the right direction," wrote Kristin Graziani, president of music distributor Stem, in an op-ed breaking down the new royalty model, which you can read here.
Among the changes will be the introduction of a new minimum annual streams threshold of 1,000 plays, which must be hit in order for tracks to start generating money. The news was confirmed by Music Business Worldwide, who also verified that the streaming giant's bottom-line messaging to labels and distributors remains that the move is "designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month."
At current rates, five cents is generated at around 200 plays. (By that same standard, 1,000 streams gets you, at most, $3.00.) Spotify believes that implementing this regulation will de-monetize a portion of tracks that previously absorbed 0.5 percent of the service's royalty pool — thus relocating tens of millions of dollars annually to the other 99.5 percent of the pool, expected to move an estimated $40 million that would have been paid to tracks with fewer than 1,000 streams next year alone.
"This targets those royalty payouts whose value is being destroyed by being turned into fractional payments — pennies or nickels," a source told Music Business Worldwide. "Often, these micro-payments aren't even reaching human beings; aggregators frequently require a minimum level of [paid-out streaming royalties] before they allow indie artists to withdraw the money."
The other two policies included alongside the minimum annual streams threshold are that labels and distributors will be charged a penalty for delivering content responsible for fraudulent streams, and that functional tracks (white noise, etc.) will require a longer minimum play time than music tracks to earn royalties.
"The conversation on increasing payouts is far from over, but right now Spotify is starting to take steps in the right direction," wrote Kristin Graziani, president of music distributor Stem, in an op-ed breaking down the new royalty model, which you can read here.