In a recent announcement, Spotify, the renowned music streaming platform, has unveiled a series of policy changes aimed at bolstering its support for artists, especially those who rely on streaming revenues as a vital source of income. As mentioned on Xttrawave, Spotify stands out as one of the most lucrative streaming platforms for artists due to its massive user base, comprehensive global reach, and innovative revenue-sharing models.
As Spotify’s user base and music catalog have grown substantially, the company has identified three key challenges affecting the distribution of royalties. These changes are the result of close collaboration with industry partners, including distributors, independent labels, major labels, artists, and their teams.
Spotify’s new policies have three primary objectives:
(1) Combating Artificial Streaming:
The platform intends to take stricter measures to deter artificial streaming, a practice that inflates play counts artificially.
(2) Ensuring Fair Compensation:
Spotify plans to improve the distribution of small payments that often don’t reach artists due to minimum withdrawal requirements and transaction fees. This aims to address the issue of small, disregarded payments that collectively amounted to $40 million in 2022.
(3) Preventing System Exploitation:
To prevent users from gaming the system with noise recordings, Spotify will introduce a minimum threshold for track monetization eligibility. Starting next year, tracks must have reached at least 1,000 streams in the previous 12 months to generate recorded royalties.
Spotify emphasizes that these changes will not increase the size of the music royalty pool paid out to rights holders. Instead, they will ensure that emerging and professional artists receive a more equitable share of the revenue. According to Spotify, 99.5% of all streams on its platform already meet the 1,000 annual streams threshold, resulting in increased earnings for artists.
Another significant policy shift will come into effect in Q1 2024. Spotify plans to charge labels and distributors when flagrant artificial streaming is detected on their content. This measure is intended to disincentivize bad actors from uploading content that diverts revenue from honest artists.
Furthermore, Spotify recognizes the rise of “functional genres” such as white noise, nature sounds, and static that users often stream for extended periods. To combat exploitation of these genres, Spotify will require a minimum track length of two minutes for noise recordings to be eligible for royalties. Additionally, the company will work with licensors to value noise streams at a fraction of the value of music streams. These changes aim to ensure fair compensation for artists in functional genres while discouraging the artificial inflation of streaming counts.