Spotify Revamps Royalty System: A Billion-Dollar Boost for Emerging and Professional Artists
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Spotify Has Announced a Major Overhaul of Its Royalty System
Spotify has announced a major overhaul of its royalty system, aimed at driving an additional $1 billion in revenue toward emerging and professional artists over the next five years. This initiative is part of Spotify's ongoing efforts to support artists who rely on streaming revenues as a significant part of their livelihood. The new policies are designed to address three key issues affecting the royalty pool: artificial streaming, distribution of small payments, and gaming the system.
1. Combating Artificial Streaming:
Spotify has been actively investing in detecting, preventing, and removing the impact of artificial streaming. Despite these efforts, bad actors continue to attempt to divert funds from the royalty pool. To counter this, starting early next year, Spotify will begin charging labels and distributors per track when flagrant artificial streaming is detected on their content. This move follows the improved detection technology and the establishment of the Music Fights Fraud Alliance.
2. Redistributing Small Payments:
With over 100 million tracks on Spotify, many of which have been streamed between 1 and 1,000 times, the average generated revenue is minimal, often not reaching the artists due to minimum withdrawal amounts and transaction fees. To address this, Spotify is introducing a policy where tracks must have at least 1,000 streams in the previous 12 months to generate recorded royalties. This change aims to redistribute tens of millions of dollars annually to increase payments to all eligible tracks.
3. Addressing System Gaming with Noise Recordings:
The popularity of "functional" genres like white noise and nature sounds has led to exploitation by some, who shorten track lengths to maximize royalty-bearing streams. To counter this, Spotify will increase the minimum track length for functional noise recordings to two minutes to be eligible for royalties. Additionally, the value of noise streams will be adjusted to a fraction of the value of music streams.
Spotify's modernization of its royalty system
Spotify's modernization of its royalty system represents a significant step in supporting artists who depend on streaming revenue. By addressing issues like artificial streaming, small payments, and system gaming, Spotify aims to ensure a fairer distribution of funds within the music industry. These changes are expected to have a substantial impact on emerging and professional artists, driving additional revenue and fostering a more equitable environment for creators on the platform.
For more information on Spotify's updated royalty system, visit Spotify for Artists to see the new New Royalty System).
