Spotify is introducing reforms that the streaming giant says will drive an additional $1 billion in revenue towards emerging and professional artists over the next five years.
The reforms come in the wake of Deezer’s artist-centric initiative on remuneration in partnership with Universal Music Group and Warner Music, which first launched back in March 2023.
Spotify will tackle artificial streaming, as well as better distributing smaller payments that aren’t reaching artists and address those trying to game the system with noise tracks.
As a new deterrent, beginning early next year Spotify will start fining labels and distributors per track when flagrant artificial streaming is detected on their content. It follows improved artificial streaming detection technology rolled out earlier this year.
In terms of payments, Spotify now hosts well over 100 million tracks. Tens of millions of them have been streamed between one and 1,000 times over the past year and, on average, those tracks generate just $0.03 per month. Because labels and distributors require a minimum amount to withdraw, this money often doesn't reach the uploaders.
“But in aggregate, these small disregarded payments have added up to $40 million per year, which could instead increase the payments to artists who are most dependent on streaming revenue,” noted a Spotify For Artists blog post.
Starting in early 2024, tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties.
“Spotify will not make additional money under this model,” stated the blog post. “There is no change to the size of the music royalty pool being paid out to rights holders from Spotify; we will simply use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments.”
Starting next year, Spotify will also increase the minimum track length of functional noise recordings to two minutes in order to be eligible to generate royalties. Functional genres will include white noise, nature sounds, machine noises, sound effects, non-spoken ASMR, and silence recordings.
By setting a minimum track length, these tracks will make a fraction of what they were previously earning, freeing up that extra money to go back into the royalty pool for real artists.
The changes are now being considered by label associations and rights-holders amid some concerns in the DIY/indie sector about a two-tier system being put in place.
IMPALA, the independent music companies association for Europe, is currently canvassing member views on the proposed changes. The proposal will also be discussed at its upcoming board meeting which will take place next week.
"Our focus is and will remain ensuring a fair, diverse and sustainable music ecosystem for all, as set out in our 10-point plan to make the most of streaming, which was released two years and a half ago and was updated earlier this year," said IMPALA in a statement.
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