In a monumental shift set for Q1 2024, Spotify aims to revolutionize its royalty payout model with the goal of channeling $1 billion over the next five years towards genuine artists and rightsholders, as confirmed by MBW (Music Business Weekly). While the platform will maintain its pro-rata royalty system, it plans to implement three crucial changes to address issues impeding money from reaching working artists.
1) Minimum Annual Streams Threshold
Starting in Q1 2024, each track on Spotify will be required to attain a minimum number of annual streams before it becomes eligible for royalties. While the exact stream count remains undisclosed, this change aims to de-monetize tracks that currently earn less than five cents per month on average.
2) Financial Penalties for Distributors
Spotify is introducing monetary penalties for distributors, including labels, when fraudulent activity is detected on tracks they’ve uploaded. This move intends to deter fraudulent practices and ensures honest artists and rightsholders receive their rightful royalties.
3) Minimum Play-Time for Non-Music Tracks
Spotify plans to elongate the minimum play-time for ‘non-music noise’ tracks before they can generate royalties. This change targets content like white noise or binaural beats, which is currently paid the same as music tracks. The longer play-time requirement aims to distribute more money to music content.
These three changes mark a significant shift in Spotify’s royalty model, with the objective of redirecting $1 billion away from fraudulent activities and low-earning tracks towards legitimate artists and rightsholders. While there may be varying opinions on these changes, they are seen as steps in the right direction by some major rightsholders.
Spotify’s commitment to maintaining platform integrity and supporting artists is evident in these forthcoming adjustments.
