Editor’s Note
This article outlines Spotify’s new royalty policies designed to address streaming fraud and manage platform content. The changes aim to ensure that the company’s growing payouts—over $40 billion to date—more effectively reach legitimate artists and rights holders.
Spotify officially announced a significant change to its royalty system on Tuesday, introducing several new policies aimed at combating streaming fraud and managing the vast volume of content on the platform.
The company identified three specific issues as having reached a “tipping point” and is collaborating with industry partners to introduce policies to: (1) further deter artificial streaming, (2) better distribute small payments that aren’t reaching artists, and (3) rein in those attempting to game the system with noise.
Most notably, starting early next year, Spotify will implement a payment threshold requiring songs to reach at least 1,000 streams before they can generate any royalties. According to Spotify data, of the 100 million songs on the platform, only about 37.5 million have more than 1,000 streams. This means over 60% of all tracks do not meet the threshold. However, these songs account for less than 1% of all streams on Spotify.
The policy has alarmed many independent musicians concerned that their already small share of streaming revenue will shrink further. Some artists have criticized the move as redirecting earnings from smaller artists to larger, more popular ones.
This critique touches on broader industry debates about streaming services’ “pro-rata” payment model versus a potential “user-centric” model.
Spotify argues that an individual stream is worth very little, and songs affected by the new threshold earn about 3 cents per month on average. Furthermore, many music distributors have minimum withdrawal amounts (e.g., $2 on DistroKid), making these tiny payments inaccessible to artists anyway.
While individually insignificant, Spotify states these small payments collectively amount to about $40 million annually. The company plans to redistribute this money to songs that meet the 1,000-stream threshold. Tracks that meet the threshold represent a minority on the platform but account for 99.5% of all streams.
Some industry executives have voiced support for the changes. Denis Ladegaillerie, founder and CEO of Believe (parent company of TuneCore), welcomed the initiative.