Tracks on Spotify will require a minimum number of plays before they can generate income

Swedish streaming service Spotify announced last month that it intended to change how it would compensate artists with its royalty model. Today these changes have been confirmed.

Part of the proposed changes to the Spotify royalty model was that a new threshold of "minimum streams" would be introduced although no exact figure was given for what this threshold would be.

The measure proposed by Spotify last month would allegedly save the streaming service $40 million per annum.

The streaming service said in today's announcement that this move is “designed to [demonetise] a population of tracks that today, on average, earn less than five cents per month”.

In order to generate five cents a month in recorded music royalties on Spotify in the US, an artist would need 200 plays on a track.

Spotify believes that by demonetising these streams, they will de-monetise a portion of tracks that previously absorbed 0.5% of the service’s ‘streamshare’ royalty pool.

Spotify has told industry members that it expects the new 1,000-play minimum annual threshold to reallocate tens of millions of dollars per year from that 0.5% to the other 99.5% of the royalty pool.

However, there has been some concern that the new 1,000 streams threshold would adversely affect small and emerging artists.

Last month's announcement proved controversial among artists on X, with Irish artists Pillow Queens one of many taking to the platform. Their tweet was affirmed by Dublin based hip hop artist Kojaque who said "So where does all the money go then?".

So where does the money go then?

— Kojaque (@kojaque) October 26, 2023

It is unclear how this money will be reabsorbed into the 99.5% of the royalty pool.

As reported by Music Business Worldwide one source said: “This targets those royalty payouts whose value is being destroyed by being turned into fractional payments – pennies or nickels.

“Often, these micro-payments aren’t even reaching human beings; aggregators frequently require a minimum level of [paid-out streaming royalties] before they allow indie artists to withdraw the money".

These reforms proposed by Spotify are designed to weed out fraudulent tracks set up by A.I or human 'stream farms' where agents create 31 second tracks and play them on loop to generate revenue.