The independent artist community has long held a belief that Spotify’s royalty payout rates are not sufficient. But now, as reported by Music Business Worldwide, the streaming company has a new royalty model in the works that may be perceived as even more punishing for smaller artists and bands.
According to Music Business Worldwide (MBW), the streaming service plans to roll out changes to its royalty system in early 2024. This new royalty system will “de-monetize a portion of tracks that previously absorbed 0.5% of the service’s royalty pool.”
As noted by MBW, every play on Spotify over 30 seconds triggers a royalty payment; however, by early 2024, that will not be the case.
The sources MBW spoke with regarding this upcoming system didn’t share an exact number regarding the number of streams needed to meet the threshold for royalty payment. That said, one source did share that this decision “is designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month.”
Among other details shared, MBW mentions Spotify’s intentions to address white noise/nature/atmospheric tracks, noting: “Introducing a minimum length of play-time that each non-music ‘noise’ track must reach in order to generate royalties.”
It’s also noted that Spotify’s new system will also financially penalize music distributors and labels “when fraudulent activity on tracks they have uploaded to Spotify has been detected.”
While it is one thing for a prominent underground band like Gatecreeper to generate a large number of streams relatively easily, a very new and super small band may struggle to hit what’s needed to receive a royalty payout.
For new bands just breaking out into a music career and attempting to share songs on a platform featuring hundreds upon thousands of songs, it could prove challenging for them to reach the threshold to receive royalties. But to clarify, what that exact threshold is has not been made clear (as noted by MBW).
There are a lot of additional details associated with Spotify’s upcoming royalty changes, and if you want to learn more about what’s involved, you can read the full report from Music Business Worldwide here.