Spotify’s new royalties scheme angers indie musicians

Tech has waded into another feud with artists – and for once, it’s not related to the use of AI. Musicians around the world aren’t happy with Spotify’s new royalty scheme.

Well, if your songs are listened to more than 1,000 times on Spotify, you’re fine – you’ll still get paid. It’s not a lot – on average, Spotify pays an artist around $4 for 1,000 streams – but it’s something.

But if you’re just starting out, experimenting as a DIY creator, or simply out of luck over a particular period, even a thousand streams could be hard to garner. And now, Spotify has announced that its new payment policy will exclude songs with fewer than 1,000 annual streams.

According to the audio streaming giant, more than 60% of the platform’s catalogue, consisting of over 100 million tracks, doesn’t reach this threshold and generates only $0.03 per month.

And because of fees, withdrawal requirements, and simply forgetting about the payments, even this tiny amount of money doesn’t reach the uploaders, Spotify says.

Altogether, though, these payments reach about $40 million per year, and Spotify is now pledging to redistribute the money to all eligible tracks. The company adds that it will not make any extra money under the updated model.

“It’s more impactful for these tens of millions of dollars per year to increase payments to those most dependent on streaming revenue – rather than being spread out in tiny payments that typically don’t even reach an artist as they do not surpass distributors’ minimum payout thresholds,” the company explained.

The new order has proved divisive. For instance, Damon Krukowski of the dream-pop duo Damon and Naomi, compared the model to a “regressive tax” in a blogpost. He said payments to artists who already receive less will be cut in order to boost payouts for those who already receive more.

“This will move an estimated $40-$46 million annually from artists like Damon & Naomi to artists like Ed Sheeran. Spotify will tell you it’s not about artists you know. Why would you believe them?” Krukowski also wrote on X.

A legal challenge is also possible. Amelia Fletcher, a competition law expert, said the model was “discriminatory and exploitative” in an open letter sent to Spotify CEO Daniel Ek.

For what it’s worth, Spotify said that the issue is bad actors trying to game the system and hiding artificial streams – ones that don’t reflect genuine user listening intent – with the help of bots or scripts. The streamer has already rolled out artificial streaming detection technology earlier in 2023.

“Bad actors continue to attempt to steal money from the royalty pool that should be delivered to honest, hardworking artists,” said Spotify.

“We believe the policy will eliminate one strategy used to attempt to game the system or hide artificial streaming, as uploaders will no longer be able to generate pennies from an extremely high volume of tracks.”