Spotify, the world's largest music streaming service, is planning to change its royalty model in early 2024, according to multiple media reports. The changes are expected to shift about $1 billion in royalty payments over the next five years to more 'legitimate' artists and rights holders, while de-monetizing some low-streaming tracks, non-music noise tracks, and fraudulent uploads.
The new royalty model will keep the existing pro-rata system, which distributes royalties based on the share of total streams each track generates. However, it will introduce new thresholds and penalties that will affect the lowest-streaming acts and those who abuse the system.
According to Music Business Worldwide, the three main changes that Spotify plans to implement are:
- A new threshold of minimum annual streams that a track must meet before it starts to generate royalties. The threshold will de-monetize tracks that had previously received 0.5% of Spotify's royalty pool, which amounts to about $40 million per year.
- Financial penalties for music distributors and labels when fraudulent activity on tracks they have uploaded to Spotify has been detected. Fraudulent activity could include using bots or fake accounts to inflate streams or manipulate playlists.
- A minimum play-time length that non-music noise tracks, such as bird sounds or white noise, must reach to generate royalties. This is aimed at preventing these tracks from taking up a disproportionate share of the royalty pool.
Spotify has been in talks with major record labels, independent labels, and distributors for weeks about the changes, sources say. The major labels, which include Universal Music Group, Sony Music Entertainment, and Warner Music Group, are likely to benefit from the new terms, as they will receive a larger share of the royalty pool from their more established artists and rights holders.
Spotify said in a statement that it is "always evaluating how we can best serve artists, and regularly discuss with partners ways to further platform integrity. We do not have any news to share at this time."
The changes come amid growing debates and experiments in the music industry about alternative royalty models, such as user-centric or fan-centric models, which would distribute royalties based on each user's listening habits rather than the total streams of each track. Some streaming services, such as Deezer, SoundCloud, and Tidal, have announced or launched trials of these models in partnership with some labels.
However, Spotify's plans do not include such a model, nor do they weight some streams more than others based on factors such as user engagement or playlist placement. This could be a major difference from what some labels and artists have been pushing for.
The impact of these changes on artists and rights holders is unclear and may vary depending on their streaming performance and distribution deals. Some observers have expressed concern that the changes could hurt long-tail artists and independent music, while others have welcomed them as a way to reward more 'legitimate' artists and combat fraud.
Now that your updated time to get back to work, back to the beats.
댓글