Spotify Unveils Royalty Model Changes Forecasted To Generate $1 Billion For Artists Over Five Years

Spotify has announced upcoming changes to its royalty model, projecting a $1 billion increase in revenue for new and popular artists over the next five years. The streaming giant plans to direct more funds towards popular artists and record labels while addressing issues such as streaming fraud and low payouts for certain tracks.

Under the new policy, Spotify aims to combat artificial streaming, enhance distribution of small payments to artists, and curb attempts to manipulate the system. The company anticipates that by addressing these issues, an additional $1 billion in revenue will be generated for emerging and professional artists.

To address the low payout threshold, starting next year, tracks must achieve a minimum of 1,000 streams in the past 12 months to qualify for royalties. Spotify emphasizes that the size of the music royalty pool remains unchanged; instead, funds will be redistributed to eligible tracks, eliminating $0.03 payments and potentially increasing earnings for artists.

Spotify acknowledges that many tracks, streamed between 1 and 1,000 times, generate minimal revenue. The new policy aims to redirect the tens of millions of dollars previously dispersed in small payments to better support artists who heavily depend on streaming revenue.

To discourage artificial streaming, Spotify plans to charge labels and distributors per track when artificial streaming is detected, starting next year. The company believes this proactive approach will discourage the uploading of such content.

Additionally, Spotify aims to address the manipulation of the system with noise recordings by increasing the minimum track length for functional noise recordings to two minutes. This move is designed to prevent bad actors from artificially shortening tracks, ensuring fair compensation and contributing to the overall revenue pool for artists.

Through these measures, Spotify seeks to create a fairer and more sustainable streaming environment, benefitting artists who rely on streaming revenue for their livelihoods.