In the next 5 years, streaming giant, Spotify has announced plans to drive an additional $1 billion in revenue for emerging and professional musicians on its platform.
Spotify made this known in a blog post that explained the many initiatives on track to enhance its support for musicians, on Tuesday, November 21.
The music streaming giant asserts its commitment to collaborative efforts with artist distributors, independent labels, major labels, label distributors, and artists along with their respective teams, in order to refine payment distribution procedures.
What Spotify said
- “As Spotify payouts to the music industry continue to grow over $40 billion and counting we want to make sure that money is going to the people our platform is designed to enable: emerging and professional artists.
- “However, as the royalty pool and catalogue on Spotify have surged, three particular drains on the royalty pool have now reached a tipping point. So, we’re working in close collaboration with industry partners artist distributors, independent labels, major labels, label distributors, and artists and their teams to introduce new 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.
- “While each of these issues only impacts a small percentage of total streams, addressing them now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years.”
Starting in early 2024, Spotify will institute track monetization eligibility criteria, meaning that it will start charging labels and distributors per track when flagrant artificial streaming is detected on their content.
According to Spotify, this new deterrent follows improved artificial streaming detection technology we rolled out earlier this year, as well as the establishment of the newly formed Music Fights Fraud Alliance.
More insights
Also, by next year tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties.
Spotify will not make additional money under this model. There is no change to the size of the music royalty pool being paid out to rights holders from Spotify; we will simply use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments.
- The rationale behind this move is to foster a fairer landscape for artists in functional genres while discouraging the labels and distributors from continuing to distribute the music of known bad actors that “attempt to divert money from honest, hardworking artists. These charges will support our continued efforts to keep the industry and platform free of artificial activity,” Spotify added.