Spotify is drastically changing their payment model in 2024, taking a harder (albeit still weak) stance against bots and limiting non-music noise content on the platform.
- Songs will now require 1,000 streams per year before they start paying royalties
- Songs that receive 90% of more streams from fraudulent sources will receive a fine of $10 to the distributor or record label
- Audio that falls into ‘non-music noise content’ will require more than 30 seconds to count as a stream
Spotify estimates these 3 changes will add $1 Billion to the royalty pool over the near 5 years. This averages to $200 Million per year in additional royalties.
As a result this should increase the payment per stream for songs that do meet the 1,000 stream threshold.
It seems like these changes are largely targeted at artists who abuse the platform in some way. Meaning, people that spam upload hundreds of low effort or AI generated songs, people that run bots and people that upload non-music content. However as a result it also affects the smallest artists on the platform.
Let’s talk about each of these 3 points in more detail.
1,000 Stream Threshold
I ran a poll on my YouTube channel of which 1,200 people voted how they feel about this change to a 1,000 stream threshold before you get paid on Spotify.
- Roughly 1/3rd said they hate this change
- Roughly 1/3rd said they don’t care or understand the need for the change
- Roughly 1/3rd said they love this change
So artists are clearly divided for how they feel about this.
The way it works is very specific as well, and artists slow to hit 1,000 streams per year will miss out on royalties which isn’t ideal. For example:
- If you get 900 streams in month 1 and 101 streams in month 2, you’re only paid for 101 streams
- If you get 500 streams in month 1, 400 streams in month 2 and 200 streams in month 3 you’re only paid for 200 streams
After you hit 1,000 streams you get paid for all future months for 12 months, then you’re demonetized again until you hit 1,000 again. It’s a somewhat confusing system honestly.
Arguments Against This Change
Smaller artists can end up missing out on a reasonably significant amount of royalties in some cases. For example, an artist might have 20 songs getting 500 streams per year and as a result won’t make the $32 in royalties this would generate.
This money, even with how small it is, can inspire an artist to keep working harder. It may not be much money, but at least it covers the cost to distribute the music.
Additionally, it’s just wrong. This is money your music earned, therefore you should get it.
Arguments For This Change
The amount of money small artists are missing out on is insignificant. They aren’t relying on this income, and they likely aren’t full time artists. If an artist has released 20 songs and hasn’t crossed 1,000 streams they’re likely not taking their music seriously.
Other platforms like YouTube, SoundCloud, Audiomack and more impose thresholds you must pass before you can collect royalties. In fact, the threshold to get monetized on YouTube is significantly harder to overcome.
To increase royalties Spotify either has to raise prices, reduce the amount of streams happening on the platform or find ways to redistribute the money coming in. The money may as well go to the artists that actually rely on it to pay their bills.
How I Feel
I would have most preferred they switched to a user-centric payment model instead. It allows artists to get paid in a much more fair manner, reduces the problem of bots on the platform and rewards artists that hold people’s attention.
In my opinion 1,000 streams per year per song is overkill. Why not go for a profile level threshold instead of a track specific threshold?
My music personally sits above this threshold anyways so i’m not really affected. The threshold is quite low and I think the change is fine. However I feel for the artists who fall just below the threshold and are missing out on royalties.
Fines For Bots
I’m very happy that they’ve taken a harder stance against bots here, but I have some concerns.
- A $10 fine is insignificant for labels. This doesn’t deter them at all.
- Are distributors going to pass this fine onto artists?
- How are they going to handle false flags?
- How are they going to handle situations where an artist gets bot streams by accident or against their will?
I feel like labels should have a larger fine, and have additional penalties. Major label artists especially get away with bots, and their music is never pulled from the platform. If Justin Bieber were running bots and had his song pulled and banned from the platform, that would be a massive deterrent for any labels running ads – much more than $10.
Non-Music Noise Content
Non-music noise content can be nature sounds, rain recordings, white noise and more. Generally this audio format is designed to extract as much money from the platform as possible. Many people do have genuine reasons for consuming this, largely they use it while sleeping or relaxing, so it should stay on the platform.
However creators of this noise content typically make their ‘songs’ 30-45 seconds long, and upload hundreds of ‘songs’ per year.
To fight this, Spotify is imposing a limitation on how long a stream will be. Regular music will still count 30 seconds as a stream, but noise content will have a longer duration or require multiple streams to count as one. I haven’t heard exact numbers for this yet, but to me this sounds like a fair change.
Creators get to keep their profiles and still make money, but they have to make longer tracks.
I’m just worried about music that sounds like noise to some, but is actually art. Will some experimental songs get false flagged? What about transition tracks on an album?
More
If you want to watch a video version of this post you can do so here.
Originally I heard about these changes from Music Business Worldwide, so consider checking out their article on the topic here.
