Spotify Officially Reveals Revamped Royalties System — With a Minimum Annual Stream Threshold for Payments, Fraud Penalties, and ‘Noise Recording’ Changes

spotify royalties
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spotify royalties
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A heavily discussed Spotify royalties revamp has been confirmed. Photo Credit: Thibault Penin

Following much speculation as well as payment pivots at Deezer and Apple Music, Spotify has officially unveiled a far-reaching royalties overhaul.

Spotify described the coming compensation adjustments in a more than 1,000-word announcement message today, confirming many previously covered details and shedding light upon a few heretofore undisclosed components of the pivot.

Beginning with the especially significant stream-count threshold that tracks will need to hit to generate royalties, Spotify formally acknowledged an annual minimum of 1,000 streams per song. Amid challenges from some in the music community, the service further clarified that the new approach, which will seemingly halt payments for the vast majority of on-platform works, will extend only to recorded royalties.

Starting “early” next year, “tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties,” wrote Spotify, which is said to host “well over 100 million tracks.”

The carbon-credits purchaser also highlighted that the “small disregarded payments” at hand, which nevertheless total approximately $40 million per year, will be used to “increase the payments to all eligible tracks.”

In explaining the change, Spotify emphasized that “99.5% of all streams are of tracks that have at least 1,000 annual streams” and expressed the belief that the measure could reduce fraud.

Expanding upon the latter, the platform, as we reported one week back, is poised to “start charging labels and distributors per track when flagrant artificial streaming is detected on their content.” Spotify opted against relaying exactly what this charge will involve or, among other things, how it’ll handle alleged fraud committed by third parties without the knowledge of distributors or labels.

According to the mentioned report, though, the penalty will dock €10 from the noted entities’ royalty payments for every infraction, consisting specifically of tracks that derive 90 percent or more of their streams from fraud during an as-yet-undefined window.

“We believe this will meaningfully deter labels and distributors from continuing to distribute the music of known bad actors that attempt to divert money from honest, hardworking artists,” the Google-partnered business spelled out of its decision.

Lastly, beginning “next year” as opposed to “early next year,” Spotify intends to establish a minimum per-recording runtime of two minutes before “white noise, nature sounds, machine noises, sound effects, non-spoken ASMR, and silence recordings,” now classified collectively as “noise,” will generate royalties.

Additionally, the relevant uploads, many of which have for years been raking in sizable payments, will in “the coming months” see their per-play value reduced to “a fraction of the value of music streams,” Spotify said.