Streaming service Spotify have announced changes to how it will pay artists

Spotify have today announced changes to how the streaming service will pay artists.

The company is planning to implement changes to its streaming royalty model in early 2024 that would adversely effect the lowest-streaming acts, non-music noise tracks and distributors and labels committing fraud.

As it currently stands, every play on Spotify over 30 seconds long incurs a royalty payment. This won’t be the case by early next year.

The new changes are as follows:

• Spotify will introduce a threshold of minimum streams because a track can generate royalties.

This has been the most controversial of the new royalty payment structure. The new system will adversely affect smaller acts who either do not meet the minimum streams requirement or accrue streams just above the threshold. It is unclear how high the new streaming threshold will be.

It has been said that the new threshold will demonetise tracks that had previously received 0.5% of Spotify’s royalty pool.

The move is allegedly designed to only affect tracks that earn less than $0.05 a month.

There has been some suggestion made by Music Business Worldwide,  that for these tracks to generate $0.05 per month in royalties, they would need to generate 17 plays a month, or around 200 plays a year.

The website continues to states that 99.5% of Spotify's artists will continue to be able monetise their work after these changes".

By specifically targeting this  relatively tiny proportion of tracks on its service that are very low-popularity, and very low-revenue-generating, it is estimated Spotify can save a heft $40 million.

• The second change is that the streaming service is set to financially penalise distrubutors of music, including record labels, when fraudulent activity is detected.  

In May 2023, Spotify did a mass sweep on fraudulent tracks set up by A.I or human 'stream farms. But it didn't stop there.

A spokesperson for Spotify said: 'Right now, people can try 'game' Spotify, get caught, see their tracks get taken down and they haven't lost anything. By penalising this kind of activity at the point of distribution, Spotify  is creating a deterrent for both bad actors and for the distributors enabling those bad actors".

As a result, Spotify will beginning of 2024 fine these bad actors.

The penalty will come in a 'per track' format.

• There will be an introduction of minimum track length that non-music 'noise' tracks must meet in order to generate revenue.

As it currently stands, non-music content creators can take advantage of the 30 second track play rule by creating white noise content and splitting it into a playlist featuring back to back 31 second tracks.

While there has been no confirmation on how long the new minimum time threshold will be, it is noteworthy that Spotify’s approach to ‘noise’ content is less aggressive than the strategy taken up by Deezer under its ‘artist-centric’ model, which will see all non-music ‘noise’ content on the platform completely de-monetised.