Spotify has officially declared its forthcoming policy shifts in royalty payouts, confirming the anticipated elimination of payments for songs garnering fewer than 1,000 annual streams. Set to take effect in early 2024, this change aims to revamp its royalty system. The alteration also includes measures against fraudulent streams and addressing the issue of ‘functional noise’ content.
Notably, the streaming giant disclosed that roughly 0.5% of its library, constituting “tens of millions” of tracks, fetch less than 1,000 annual streams. This threshold generates about $3 per 1,000 streams, often falling short of distributors’ minimum payout requirements for artists. Under the revamped policy, Spotify will redirect these royalties into a stream-share pool, exclusively catering to tracks surpassing the 1,000-stream benchmark.
Moreover, Spotify intends to combat practices like streaming bots and ‘functional noise,’ such as ASMR and short-form noise tracks, notorious for exploiting the system by stacking them in playlists for inflated payouts. The company plans to penalize labels and distributors engaging in blatant artificial streaming activities. Additionally, it will reevaluate the value of noise streams compared to music streams, potentially altering their royalty rate and criteria for qualifying as ‘functional noise.’
However, the specifics regarding the penalty system, the revised rate for ‘functional noise,’ and the criteria for identification remain undisclosed. This strategic overhaul aims to balance fair compensation for artists while curbing exploitation within the streaming landscape.
