Spotify Looks To Raise Royalty Rate, Combat Fraudulent Activity
Interesting news in the streaming world. Outlets are reporting that Spotify is looking to change it’s streaming royalty model with the “intent to move USD $1 billion in royalty payments over the next five years to ‘legitimate’ artists and rightsholders,”. Artists for years have waged war over the contributions given for their creative efforts, and Spotify is looking to change that with this new, 3-pronged strategy over a five-year period to not only increase payouts to “legitimate” artists, but also to combat rampant “fraudulent activity” on the platform.
First, Spotify is introducing a new way that tracks would start generating royalties. Currently, only 30 seconds is required to generate one (1) stream, and Spotify is now looking at a “minimum number of annual streams” and is designed to “[demonetize] a population of tracks that today, on average, earn less than five cents per month”. These royalties would go back into Spotify’s royalty bag and be redistributed to tracks that garner more attention.
Second, Spotify will be penalizing labels, distributors and any other organizations that show any sort of fraudulent activity related to their party’s uploads and they’ll be hitting them where it hurts the most, their pockets. Spotify already pulled thousands of tracks that were streamed by AI or the “stream farms” that people talk so much about. Another piece is there are certain criminal enterprises that use AI created music and AI streaming methods to money launder, creating a whole different ecosystem of responsibilities that Spotify has to tackle.
The third prong (and the one I didn’t think about but am fascinated by) is the implementation of a minimum length for ‘noise’ tracks (”non-music noise content”). White noise and ambient sound uploads have ballooned on streaming platforms, and uploaders have taken advantage. One example, uploading 31 seconds worth of ambient noise to a one song playlist. If somebody uses that playlist to fall asleep, that’s 5-10 hours of that 31 second track on repeat. Spotify didn’t release the new set amount of time for these tracks to generate royalties, but it will certainly be ironed out if Spotify is looking to increase their overall payouts to artists on their platform.
Back in June, I wrote about how SoundCloud and UMG were discussing a new payment model for music streaming (Link To June Article), and it seems like a fervent conversation amongst the labels and distributors. Now, somebody listened, and not just anybody. One of the biggest platforms for artists at all levels has decided to start the process, and I’m hoping that the other streaming giants will listen. I do have a saying though…
Never cash the check ‘till it clears.
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