Spotify Retools Payment Model
In November, Spotify made public their new royalty model as well as plans for its implementation in early 2024. Per their website “tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties.” Rather than keep the extra money for themselves, Spotify will instead “use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments.” Spotify stipulates that %99.5 of all streams are of tracks that have at least 1,000 annual streams,” so this new model will be more impactful for “those dependent on streaming revenue.”
The issue is that this new model, obviously, benefits those at the top. Labels with access to Spotify’s editorial playlists and more well down indie acts will see revenues increase. But, then, the question is how does this impact the bottom run of the earning later. Luminate recently published a report, concluding that “north of 150 million tracks could cease earning recording royalties under Spotify’s new compensation model.”
Indeed, Spotify’s decision is polarizing. Long seen as an accessible streaming service, Spotify’s move will cancel payments—albeit payments that come out to be fractions of a dollar—to millions of tracks. Ethically, does Spotify have this right? Or should all tracks generating any semblance of listenership be guaranteed compensation?
One wonders what this will do to fringe artists or artists on the come up. If they never see an initial payment, then why would they upload to Spotify? Will people still see Spotify as a platform that needs to be uploaded to?
UMAW, United Musician & AlliedWorkers which is positioning itself to be a songwriter and artist union, posits that “all artists deserve to be paid fairly for our work, not just huge artists on major labels.” Obviously, they have a point.
It will be interesting to see how this plays out in the long and short run. One has to wonder if this will further galvanize the economically marginalized classes of artists toward a greater unionization effort, eventually spiraling into something like the SAG-AFTRA and WGA strikes of last year!
