Spotify’s New Royalty Policy May Leave Many Artists Unpaid
Spotify’s latest change to its royalty distribution model could result in a substantial loss of income for independent musicians. Under this updated policy, which took effect in April 2024, tracks on the platform must achieve a minimum of 1,000 streams per year to qualify for royalty payments. The move, designed to reduce streaming fraud, aims to redirect funds toward more popular tracks, but it raises concerns for many artists and smaller labels who may struggle to meet the threshold.
Reallocating Funds to Combat Fraud
Spotify’s new policy, part of a broader industry response to the rise of low-effort “white noise” tracks and fraudulent streams, was developed in partnership with major labels like Universal Music Group and in cooperation with Deezer. The decision targets artificially generated streams, which have taken a portion of royalty payouts that Spotify hopes will now benefit artists with active fan bases. As explained on Spotify’s support page, any track that doesn’t meet the 1,000-stream minimum will be deemed ineligible for royalty payments.
Impact on Independent Artists
For independent artists, the new threshold could represent a significant reduction in earnings. Many emerging or niche musicians rely on the streaming income from tracks with modest play counts. Without this income, their financial viability on Spotify is further strained, leading many to reconsider the platform’s value for indie musicians. Critics argue that the policy shift overlooks the diversity of content on Spotify, favoring major artists while sidelining emerging talent.
As Music Radar reports, this change may exacerbate the financial challenges that indie artists already face on streaming platforms where per-stream payouts are notably low.
Exploring Alternative Distribution Models
In response to these changes, artists and independent labels are increasingly exploring alternative streaming and distribution models. Platforms offering user-centric payment systems, where royalties are paid based on individual user plays rather than a total revenue pool, are gaining interest. Such models can more accurately reflect the listening habits of niche audiences, offering indie artists a fairer income distribution.
This shift in Spotify’s policy underscores a growing divide in the streaming landscape, where larger, well-known acts tend to thrive while smaller artists struggle to maintain visibility and revenue. As platforms experiment with different payment structures, the industry will continue to adapt, potentially redefining the streaming economy for the next generation of artists.