Last week Spotify officially demonetised all tracks with under 1,000 streams annually – a new policy that could see nearly two-thirds of tracks fail to generate any royalties.
The new policy came into force on 1 April. Its launch follows a report published by the streaming giant last year, entitled "Modernising our royalty system", in which news of the much-speculated decision was first announced.
Spotify says there will be no “change to the size of the music royalty pool being paid out to rights holders” – rather, this pool will be divided among the remaining eligible tracks, presumably meaning bigger bucks for a smaller number of artists and rights holders instead of “spreading it out into $0.03 payments”.
According to Spotify data, the service’s song library contains 100 million songs, yet only around 37.5 million of them meet the new threshold to generate revenue.
The platform claims, however, that the remaining tracks – nearly two-thirds of its entire catalogue – represent just 0.5% of all streams on the platform.
Although the most controversial of them, this is not the only obstacle to royalties that Spotify has introduced. In an attempt to tackle fraudulent activity on the platform, the digital music service now also requires a minimum number of unique listeners for royalties to be generated. In addition, the length of play-time required for so-called “functional content” (such as white noise) to generate royalty payments has increased.
This development comes after Daniel Ek, co-founder and CEO of Spotify, hit back at claims the music streaming service doesn’t adequately pay artists – arguing that his firm had put over $9 billion (€8.3 billion) back into the music industry in 2023.
