(Image via forbes.com)
Staff Writer: Denise Badilla
Email: dbadilla@umassd.edu
Since Spotify’s creation in 2006, the streaming platform has been criticized for its allegedly unprofitable and unfair streaming royalties.
The earliest controversy goes as far back as 2009 when Lady Gaga’s then-new hit song “Poker Face” came out on the platform and garnered a mere $167 in royalties after being streamed one million times. Many other big-name artists, such as Taylor Swift and Coldplay, hesitated to consign their music to Spotify due to their royalty rates.
Despite these issues and several attempts to boycott the platform, Spotify has survived to 2023 as one of the most popular music streaming services, along with Apple Music.
The company has managed to win the masses’ affection through the personalization algorithms that it offers its subscribers. One of the newer features is the Spotify DJ introduced earlier this year – and, of course, the annually anticipated and widely memed Spotify Wrapped.
But Spotify is not only ‘wrapping’ up the year by allowing users to reminisce. They also introduced a modified streaming royalty model to roll out in 2024.
Spotify is tuning into a new beat with an overhaul to their streaming royalty program, hoping to strike a chord of fairness for the artists they house under their platform.
Starting in 2024, the streaming service will require each track to obtain a minimum of 1,000 streams over the last twelve months to begin accumulating streaming royalties — a drastic shift from its current pay-per-stream policy.
This revision came after reports of money loss among smaller artists, who supposedly don’t receive any streaming royalties due to factors such as minimum payout thresholds imposed by distributors and bank transaction fees.
Artists are estimated to suffer a substantial amount of financial loss in all these processes:
“In aggregate, these small disregarded payments have added up to $40 million per year, which could instead increase the payments to artists dependent on streaming revenue,” Spotify disclosed in their recent Spotify for Artists article.
Another significant change is the modification in royalty distribution for functional noise recordings, including tracks such as sound effects, white noise, ASMR, nature sounds, and silence recordings. It is now mandatory for the aforementioned genres to have a minimum duration of two minutes to qualify for royalties.
Spotify hopes this policy will deter the exploitation of these genres, which are frequently shortened to increase streaming revenue.
By implementing these adjustments, Spotify seeks to level the playing field of profit for both large and small-scale artists, as well as increase the percentage of the streaming revenue that goes directly into artists’ pockets.
However, despite Spotify’s seemingly well-intentioned plan for the future of their streaming royalties, smaller artists have spoken out about what these changes would mean for them.
Brandon Washington, also known as the LA-based independent artist Ando San, conveyed his criticism of the impending royalty changes, stating that a 1,000 stream minimum on a track is too much of an expectation for small-scale artists, who turn to Spotify to be able to share their music and their art to the world.
Washington conveys his disappointment regarding this imminent policy:
“Spotify changed the whole industry in the way that people look at the way a successful artist should be. Regardless of how many streams you have, it’s still your music and your art. As a listener, this would discourage me from listening to music on Spotify.”
Damon Krukowski of the pop duo ‘Damon & Naomi,’ with a current following of 4,321 monthly listeners on Spotify, also released a blog post regarding his sentiments on the change to come.
He compares the new system to regressive tax, giving fewer payments to those who do not have much, to begin with while boosting payments to those who have plenty:
“It is, on the face of it, the ugliest of ugly capitalist cash grabs.”
As Spotify prepares to roll out its revised streaming royalty model, the industry watches with anticipation and skepticism.
The balance between ensuring fair compensation for artists and maintaining an accessible platform for all musicians is delicate. Only time will reveal the true impact of these changes on the diverse landscape of artists and listeners within the Spotify community.
The future unfolds as Spotify attempts to strike a harmonious chord between innovation, profitability, and artistic integrity in the evolving world of music streaming.