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Spotify: Royalty Model Changes in Effect Since April 2024

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Spotify: Royalty Model Changes in Effect Since April 2024

At the beginning of April 2024, Spotify implemented its previously announced changes to its royalty payout system. Songs now require a minimum amount of streams to be eligible for monetization.

Spotify updates its royalty payout system

At the end of last year, Spotify began discussing its plans to introduce new changes to its royalty payout system and to tackle several issues. As per Music Business Worldwide, all changes went into effect at the beginning of April 2024.

Among them is the introduction of a minimum stream requirement for a track to begin generating royalties. According to Spotify’s website, “tracks must have reached a threshold of at least 1,000 streams in the previous 12 months to be included in the recorded music royalty pool calculation.” In addition, they will have to reach a minimum number of unique listeners to become eligible for monetization.

While Spotify justifies the decision based on combating fraud, it was also met with much criticism, as the platform once again prioritizes artists with larger audiences over smaller ones. Even though eligible tracks will now generate 0.5% more royalties, Spotify’s intention to put ‘legitimate working artists’ first devalues the work of those it considers less legitimate based on clicks and views.

Moreover, the streaming service will continue removing short noise content and only allow quality versions of such recordings that are at least 2 minutes long. The platform intends to limit royalty payouts to those who upload brief tracks of noise recordings and distribute the money to hard-working artists instead.

Lastly, Spotify will continue tackling artificial streaming and detecting fraudulent activity to ensure the payout model is not exploited. It will also begin penalizing those who decide to engage in such activity by charging them with a per-track penalty.

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