In an effort to better support artists heavily dependent on streaming as their livelihood, Spotify is implementing new policies to optimize the distribution of its growing payout, now exceeding $40 billion. Collaborating closely with industry partners, the platform aims to tackle three specific challenges impacting the royalty pool, potentially generating an additional $1 billion in revenue for artists over the next five years.
Issue 1: Artificial Streaming
Despite Spotify’s continuous efforts to detect and prevent artificial streaming, bad actors persist in attempting to divert funds from honest artists. In response, Spotify will introduce charges for labels and distributors when flagrant artificial streaming is identified, starting early next year. This deterrent complements improved detection technology and the Music Fights Fraud Alliance’s establishment, discouraging the distribution of music by known bad actors.
Issue 2: Payments Lost in the System
With over 100 million tracks on Spotify generating minimal revenue, small payments often don’t reach artists due to withdrawal thresholds and transaction fees. To address this, starting in early 2024, tracks must reach at least 1,000 streams in the previous 12 months to generate recorded royalties. This change reallocates tens of millions of dollars annually to increase payments to eligible tracks, benefiting artists most dependent on streaming revenue.
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Issue 3: Gaming the System with Noise
Exploiting functional genres like white noise, some bad actors artificially shorten tracks to maximize royalty-bearing streams. Spotify’s response includes increasing the minimum track length for functional noise recordings to two minutes and working with licensors to value noise streams at a fraction of music streams. These policies aim to reduce the revenue opportunity for noise uploaders and create a fairer environment for artists in functional genres.
Spotify commits to keeping artists informed as these initiatives roll out in the new year. For further details on Spotify royalties, artists can refer to the Loud & Clear section on the platform.
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