Spotify to change Royalty Structure in 2024

Spotify to change Royalty Structure in 2024

As Detailed by Billboard, Spotify will significantly change its royalty structure in 2024. The most significant changes are three main items: 1) If a track generates less than 1,000 plays in a year, that artist/rights holder will receive no payout(Spotify claims those micro-payments will then be distributed into the larger royalty pool); 2) Labels and distributors will be fined roughly $90 for any track that is determined to have 90% or higher fraudulent streams (streams played by non-humans for the purpose of generating income); 3) Non-music noise tracks must now be at least two minutes long in order to qualify for royalties and each play will count for one-fifth of a music track’s stream.

Spotify states that this move is due to the fact that a significant portion of money for non-popular tracks never makes it to the end party since digital distributors will hold back payments until the payout reaches a certain number. Since spotify pays roughly between $0.003 - $0.005 per stream, it is likely most distributors hold back payments for tracks that do not even stream 1,000 plays per year.

Interestingly, this apparently will mean 2/3 of tracks on Spotify will never get a payout because most tracks on spotify receive no plays or very few plays- a number of tracks on spotify are even artificially generated for the purpose of making money off "autoplay." Spotify estimates that about $40 million that would have been paid to the non-popular tracks will be shifted to the remaining artists. Spotify adds that the demonetization represents only .5% of money that would have been paid out, not being paid out, under the old model.