Updated: November 6, 2023
Spotify has announced it will be changing its royalties structure, with reports claiming it will pay less royalties to less-popular artists.
This new structure reportedly introduces a minimum streams per song requirement for artists to gain a payout.
According to Billboard, the streaming service giant will “de-monetize tracks that had previously received 0.5% of Spotify’s royalty pool.”
This will impact artists who don’t gain a significant amount of streams, anyone who is accused of fraudulent activity, and anyone who uploads white noise or nature sounds.
Music Business Worldwide reports that money will be redistributed through Spotify’s Streamshare royalty pot and payout to more popular songs on the platform.
In a recent conversation with Spotify, Music Business Worldwide has discovered that the precise number for the minimum threshold will be 1000 plays.
The publication reports that the move is “designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month”.
It is unknown how Spotify will determine if a track falls into the category of white noise or nature sounds.
In a statement to Mixmag, Spotify said: “We’re always evaluating how we can best serve artists, and regularly discuss with partners ways to further platform integrity. We do not have any news to share at this time.”
The United Musicians and Allied Workers shared on social media: “Artists have solutions to fix streaming but Spotify isn’t listening. Instead, they propose changes that will enrich the top of the pyramid even more, and make it even more impossible for working musicians to benefit from streaming.”
The Future of Music Coalition added: “This marks a serious shift away from how the service was pitched to the musician community at launch, as a level playing field that treated all tracks the same. Over time, Spotify has shifted further and further away from that pledge.”
The specific changes on how Spotify will measure royalties are currently unclear as the company will need new agreements with most record labels and distributors before introducing the plan.
Billboard claims that major labels will likely sign off on this change as it results in more money.
Spotify is currently in talks with many record labels such as Universal Music Group (UMG), with NME reporting that the UMG CEO announced a “newly expanded agreement” with Spotify which will be “artist-centric” and benefit “real artists with real fanbases.”
The royalty plan will reportedly be implemented early next year.
Becky Buckle is Mixmag's Multimedia Editor, follow her on Twitter