How Spotify Plans to Start Paying Smaller Artists Even Less

Smaller bands and artists who stream their material on Spotify may start making even less than they did before, thanks to some reported new royalty payout structure changes coming to the platform.

Years of allegations of unfair artist compensation had already been leveled at the ubiquitous streaming service — with small bands, indie artists and non-prominent songwriters seemingly taking the smallest of Spotify payouts already.

Spotify currently pays artists just fractions of a cent for each song of their that is streamed — between $0.003–$0.005 per stream, on average.

But as of 2024, some of those smaller artists may see even less, as newly reported in an article by Music Business Worldwide.

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The new Spotify rules will dictate that a track’s annual streams must meet a minimum threshold to generate royalties. There will also be financial penalties for record labels who attempt to game the system with fraudulent activity on tracks. Plus, a new minimum play-time requirement will be implemented on non-music and noise tracks.

Spotify Royalties Will Be Even Less for the Smaller Artists on the Platform

As further broken down by Billboard, these are the changes coming to Spotify’s royalty model:

• A new threshold of minimum annual streams that a track must meet before it starts to generate royalties. The threshold, according to MBW, will de-monetize tracks that had previously received 0.5% of Spotify’s royalty pool.

• Financial penalties for music distributors and labels when fraudulent activity on tracks they have uploaded to Spotify has been detected.

• A minimum play-time length that non-music noise tracks, such as bird sounds or white noise, must reach to generate royalties.

The changes come from conversations that have been going on between Spotify and the three major labels — Universal Music Group, Sony Music Entertainment and Warner Music Group — as well as other labels and distributors, sources say.

But while Spotify and the labels say these changes will stop fraud, what it looks like it will mean for small artists attempting to get their music heard on Spotify is that they will be paid even less than they were bringing in before. What do you think?

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