Spotify aims to better distribute royalties and prevent uploaders from gaming the system in the new year.
Last month, it came to light that Spotify was planning to introduce measures to curb fraud and increase payouts to working artists. Exactly how these initiatives would work remained vague — until now. The globally dominant streaming platform confirmed the specific terms of three major policy changes set to take effect in 2024, estimating that it could free up $1 billion for authentic content uploaders.
“As Spotify payouts to the music industry continue to grow — over $40 billion and counting — we want to make sure that money is going to the people our platform is designed to enable: emerging and professional artists,” reads a Spotify for Artists blog post. “However, as the royalty pool and catalog on Spotify have surged, three particular drains on the royalty pool have now reached a tipping point.”
The first, it says, is artificial streaming. In order to dissuade fraudsters from seeking undue royalties by inflating play counts, Spotify will begin charging uploaders for each track that violates its policies. The platform already uses artificial intelligence for “detecting, mitigating, and removing artificial streaming activity.”
Spotify will also introduce a 1,000-stream threshold that each upload must meet in order to be eligible for monetization. According to the blog post, “tens of millions” of songs on the platform fall under this minimum; each averages $.03 per month. Labels and distributors often don’t even end up paying these out to creators, and they add up to $40 million per year.
Finally, Spotify has identified “bad actors” who upload 30-second songs belonging to “functional genres” like white noise as a drain on the royalty pool. These tracks, which listeners often play while meditating or sleeping, will need to run at least two minutes in order to be eligible after the turn of the year.
Spotify announced the changes around the same time it shared that it would be forced to discontinue its service in Uruguay. The South American nation introduced an “equitable renumeration” bill for musicians that the company says “would make our business untenable.”
What difference will Spotify’s new policy changes make in the wallets of working musicians? It remains to be seen, but at least the industry-leading platform has begun taking steps toward improving the welfare of the people who deliver its greatest asset.