Spotify to Cut Royalties for Low-Streaming Artists and Noise Tracks in 2024
Spotify will change its royalty system in 2024 to benefit more established artists and rights holders, and to crack down on fraud and non-music noise tracks, sources say. Spotify has been talking with major and independent labels and distributors for weeks about the new terms. The changes include:
A minimum number of yearly streams for a track to earn royalties. This will reduce the share of tracks that get 0.5% of Spotify’s royalty pool.
Financial penalties for labels and distributors that upload tracks with fake streams.
A minimum play-time for non-music noise tracks, such as bird sounds or white noise, to earn royalties.
Spotify will need new agreements with most labels and distributors to make these changes, but not new licensing deals. The major labels are likely to agree, as they will benefit from the new terms.
Spotify did not confirm the changes, but said it is always looking for ways to serve artists and improve platform integrity.
The changes are in line with Universal Music Group’s call for an “artist-centric” model that rewards “real artists with real fanbases” and eliminates “noise” from the royalty pool. UMG has partnered with other streaming platforms, such as Tidal, Deezer and Soundcloud, to explore alternative models. UMG announced a “newly expanded agreement” with Spotify in July that addressed these issues.
Deezer’s plan, which was announced in September, was similar to Spotify’s, but more drastic. It also gave royalty “boosts” to artists who were actively searched by users, and replaced non-artist noise content with its own functional music that was excluded from the royalty pool.
Spotify’s plan does not affect passive listening royalties, which are based on algorithm-recommended playlists and auto-play features.