Spotify has officially for artists and labels, and the details are pretty much exactly In other words, smaller artists are getting something of a shaft here, as songs that don’t meet the minimum threshold of 1,000 streams per year will not be eligible for any payment whatsoever.
Spotify was already notorious for underpaying artists, but now many will get nothing at all, aside from the opportunity and privilege to exist on its servers. Spotify says this is to eliminate fraud, and indicates that the money that used to go to these smaller artists and alleged fraudsters will be redistributed to those above that 1,000 play per year threshold.
Also, the company’s nixing many payments for so-called “noise” content, like recordings of rain falling on a rooftop and other items intended for relaxation and to provide white noise. The cuts won’t impact all noise recordings, just those under two minutes in length. Additionally, Spotify’s currently looking to adjust the royalty model for noise recordings, keeping the payouts lower than actual songs. However, the company hasn’t provided any concrete details.
Spotify’s crowing that these combined cuts will provide an additional $1 billion toward artists in the next five years, but hasn’t offered details as to how the funds would be redistributed, only saying that the streamer itself would “not make additional money under this model.”
It did note that 99.5 percent of all streams meet the above thresholds, but also stated that the remaining 0.5 percent account for just $40 million per year, which is much lower than the advertised $1 billion of new funds being pumped into the system for established artists, even if you account for Spotify also claims that songs with less than 1,000 annual streams generate an average of $3 per year, which isn’t a lot. If those numbers hold, this whole thing could be much ado about, well, $3. Still, there’s something of a precedent being set here.
Spotify says fraudulent content creators often try to “game the system” by posting a high volume of tracks, generating pennies for each that add up to real money over time. This is something the company as there’s an AI component at play, so the 1,000 play threshold hopes to stop this activity dead in its tracks. Smaller artists are just collateral damage here.
In a completely unrelated note, Spotify is shutting down in Uruguay after the country passed a bill that requires fair pay to artists, The company made threats to shut down when the bill was first suggested back in July and now it has followed through. A spokesperson for Spotify Pablo Da Silveira, to say that the country’s bill would force it to “pay twice” the amount of royalties to artists. It went on to say that complying with Uruguay’s fair pay law would make its business model “unfeasible.”