Spotify’s New Royalty Payout Threshold Reportedly Set At 1,000 Plays

Last month, it was reported that Spotify will be making some major changes to its royalty payout system, meaning songs won’t earn revenue from streaming on the platform until they pass a minimum number of annual streams.

Spotify are still yet to publicly announce (let alone confirm) the change, however Music Business Worldwide (MBW) are now reporting that more details have emerged. According to multiple sources that are said to have confirmed the minutia with the publication, tracks published on Spotify will need to reach a minimum of 1,000 streams before they become eligible for revenue sharing.

The number was first revealed by Kristin Graziani, president of the music distribution platform Stem, who in a guest column for Consequence, argued that Spotify’s upcoming change could actually benefit artists. She wrote: “As president of a distributor collecting royalties on behalf of artists, I understand more than most how complicated it is to pay artists what they deserve. Over the past eight years, Stem has become known for showing artists exactly what they’ve earned, paying them on time, and advocating for much larger industry changes. This conversation is not new to us; we care so deeply because we’ve developed successful partnerships with artists at all stages of their career...

“Spotify’s changes can help us deliver on that goal. These new policies acknowledge the simple truth that improving outcomes for artists goes beyond demanding bigger payouts from the DSPs. There are plenty of problems in this industry preventing money that’s already in the system from reaching artists. In addition to increasing payouts, we must plug these holes or else the same bad actors will continue to profit at the expense of artists who are none the wiser. Let’s take a look at what Spotify is trying to accomplish today.”

In addition to the new streaming number threshold, Spotify is reportedly making two further changes to its royalty system: labels and distributors will be penalised for uploading content that generates “fraudulent streams”, while the minimum required length for tracks intended to be streamed as background noise (ie. “songs” of white noise and binaural beats) will be extended. At the time of writing, those tracks only need to run for a minimum of 30 seconds to earn royalties from streaming.

As reported by MBW, these changes will affect an average 0.5 percent of tracks uploaded to Spotify, and the money saved by having them barred from earning royalties – said to be “tens of millions of dollars per year” – will be redistributed among the remaining 99.5 percent of tracks in Spotify’s pro-rata royalty pool.

As one source close to Spotify reportedly told MBW: “This targets those royalty payouts whose value is being destroyed by being turned into fractional payments – pennies or nickels. Often, these micro-payments aren’t even reaching human beings; aggregators frequently require a minimum level of [paid-out streaming royalties] before they allow indie artists to withdraw the money. We’re talking about tracks [whose royalties] aren’t hitting those minimum levels, leaving their Spotify royalty payouts sitting idle in bank accounts.”

As mentioned earlier, Spotify are yet to formally detail any of these changes. TheMusic.com.au reached out to the streamer for comment when the news first broke in October, and in a statement, we were told by a representative: “[Spotify’s team is] always evaluating how we can best serve artists, and regularly discuss with partners ways to further platform integrity. We do not have any news to share at this time.”

If legit, the reported changed to Spotify’s royalty system come amid a slew of updates to the streamer’s operations, including the recent launches of its AI-powered “DJ” tool and personalised “daylist” feature.