Spotify will reportedly apply a new royalty system from early next year. Musicians with very few streams therefore receive fewer royalties due to the alleged increased threshold. In addition, the profitability of noise songs would be limited.
Spotify’s plan is according to Music Business Worldwide to pay $1 billion in additional sales to “legitimate artists” and music rights owners over the next few years. Three new conditions have reportedly been formulated for this. For example, the minimum number of streams per year required before royalties are generated may increase. The source does not say how many streams are involved. In total, this new rule frees up 0.5 percent of the royalty budget, which in practice then goes to larger artists and labels. For comparison, Spotify paid $7 billion in royalties in 2021. The rule would therefore supplement that budget by tens of millions of dollars.
Furthermore, MBW says that two forms of fraudulent behavior are being tackled with new rules. On the one hand, Spotify will reportedly impose fines on distributors and record labels if fraud is detected, for example when listening figures are artificially inflated. In addition, the minimum length of noise tracks will be increased before these background sounds are eligible for royalties. The medium again does not specify what length it concerns.
Spotify itself has not yet confirmed the new plans. In a statement opposite The Verge the music platform only confirms that there are always discussions with partners to improve the integrity of the platform, which may refer to the two latter rules. According to MBW, the new rules will come into effect from ‘early 2024’.