Spotify is making big changes to how it pays artists in 2024. After Music Business Worldwide hinted at it last month, Spotify has now officially announced the details of its new royalty model. The music streaming giant wants to better support artists who depend on streaming for their income.
In a recent blog post on Spotify for Artists, the company revealed that it’s working closely with industry partners, including labels and artists, to address three key issues. First, they aim to discourage fake streaming, then to ensure small payments reach artists, and finally, to prevent people from trying to manipulate the system.
To achieve these goals, Spotify is introducing a minimum threshold for streams before a track starts earning royalties. Starting next year, a track must have at least 1,000 streams in the previous 12 months to generate recorded royalties. Spotify claims this won’t make them extra money, but it will help artists who often miss out on payments for tracks with fewer than 1,000 streams.
Spotify stated that nearly 99.5% of all streams are of tracks with at least 1,000 annual streams. The company believes this change will drive an additional $1 billion in revenue towards emerging and professional artists over the next five years.
Another significant change is Spotify’s decision to charge labels and distributors when they detect “flagrant artificial streaming” on their content. This move is designed to discourage bad actors from uploading fake streams and diverting money from legitimate artists.
Additionally, Spotify is targeting what it calls “functional genres,” such as white noise and nature sounds, where some bad actors manipulate short tracks to earn more money. To counter this, Spotify plans to increase the minimum track length for these genres to two minutes and work with licensors to value noise streams at a fraction of music streams’ worth.
Spotify is overhauling its royalty model to make payments fairer for artists, deter fake streaming, and ensure that more money goes to those who depend on streaming revenue.