Spotify is facing major backlash against a policy change that will eliminate royalties from a majority of its musical catalog. According to a report from Music Business Worldwide, Spotify is raising the threshold that needs to be reached before artists can earn royalties on their music. Songs will now have to reach around 200 annual streams before Spotify will pay the artist. If that threshold isn't reached, any money the artist would have earned will be diverted back into Spotify's general revenue pool. Essentially, bigger artists would earn the money created by smaller indie artists. Furthermore, while 200 streams a year doesn't sound like a lot, MBW explained that the figure is a lofty goal for many small, independent artists. Furthermore, when multiplied across the low-play songs on the platform, Spotify is saving tens of millions dollars a year.
Spotify argues that the change will be negligible. The company argued small creators often don't see the revenue regardless. However, it is a widely hated change. Some have gone as far as to call it a reverse Robin Hood scenario. In essence, Spotify is taking from smaller artists to pay bigger ones. “Right now, streams and revenue are effectively synonymous, but by this time next year, they will mean very different things. [Smaller artists] will be othered, their revenue becoming a new black box for the biggest artists to share between themselves," theorized industry analyst Mark Mulligan. Spotify said in a statement that nothing had been finalized yet.
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Spotify's Full 2024 Changes
While the royalties was the biggest and most controversial change, it wasn't the only thing that Spotify proposed changing next year, citing two other potential changes. The first is a widely welcomed change, bringing fines to distributors who enable fraudulent activity on tracks they own and distribute. Streaming fraud, be it through bots, click farms, imposter tracks, or ghost artists, has become a widespread issue. A crackdown on the practices that enable the fraud is seen as long overdue by the industry.
Elsewhere, Spotify also plans to crack down on royalties for "noise tracks", i.e. such as background noise like rain or white noise. Currently, Spotify grants royalties on playtime over 30 seconds on these tracks. However, this has led to a spate of creators releasing full albums comprised of 31-second tracks to maximize their revenue. The new change will raise the minimum playtime from 30 seconds to an unspecified number.
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