STOCKHOLM, Sweden (CelebrityAccess) — The music streaming giant, Spotify, has unveiled the anticipated changes to its royalty distribution policies, which it says will support emerging and professional artists while combating challenges in the distribution of streaming revenues.
According to Spotify, the changes to its streaming policies will address three key issues impacting the equitable distribution of royalties and to redirect an estimated $1 billion in revenue toward artists within the next five years.
The first area of focus for Spotify is artificial streaming, where bad actors inflate streaming numbers through the use of automated systems, draining the royalty pool for legitimate artists. As part of their intended fix, Spotify will begin levying fees for labels and distributors found engaging in blatant artificial streaming practices, slated to commence early next year. This deterrent aligns with the platform’s enhanced technology to detect and eliminate artificial streaming, coupled with the formation of the Music Fights Fraud Alliance.
The streaming platform said it plans to begin levying the fees in early 2024.
Spotify announced that it is also setting its sights on addressing small payments that become lost in its system. According to Spotify, with the scope of its catalog, which encompasses more than 100 million tracks, a significant portion of them garner only minimal streams, often generating negligible monthly earnings of approximately $0.03 per track.
However, due to minimum withdrawal thresholds and bank transaction fees, these small payments frequently remain unclaimed, accumulating to a substantial $40 million annually. To address this, Spotify will implement a new policy in 2024, with only tracks that have accrued at least 1,000 streams in the last year will qualify for recorded royalties. This change aims to redirect these funds towards eligible tracks, benefiting artists more reliant on streaming revenue.
According to Spotify, the update to low listen count streaming royalties will not generate any additional money for the streaming platform and will not change the size of the music royalty pool being paid out to rights holders from Spotify and will instead increase payments to all eligible tracks, rather than spreading it out into $0.03 payments.
With their policy changes, Spotify is also taking aim at what it describes as “functional” genres such as white noise, whale sounds, and static sound streams. Spotify notes that such streams are often listened to in the background for hours and the system is sometimes exploited by bad actors who cut their tracks artificially short, raising streaming numbers artificially.
By raising the minimum track length for functional noise recordings to two minutes and revising the valuation of noise streams, Spotify seeks to reduce disproportionate earnings generated by these categories, ensuring fairer distribution within the royalty pool.
