Ayodeji Ayenuwa
Spotify, the streaming giant, has unveiled plans to generate an additional $1 billion in revenue for emerging and professional musicians on its platform over the next five years.
The announcement was made in a recent blog post, where the company outlined its commitment to collaborating with artist distributors, independent labels, major labels, and their teams to refine payment distribution procedures.
In addressing challenges within the existing royalty structure, Spotify identified artificial streaming, concerns about small payments not reaching artists, and attempts to manipulate the system with noise as primary issues.
The company aims to introduce new policies to tackle these issues, anticipating that the proposed changes will contribute an extra $1 billion in revenue for artists over the next five years.
“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,” states Spotify’s blog post.
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Starting in early 2024, Spotify plans to implement track monetization eligibility criteria, with labels and distributors being charged per track detected with artificial streaming.
The company emphasizes that these alterations won’t result in increased overall revenue but will redirect funds, eliminating $0.03 payments and channeling more money to eligible tracks.
Spotify’s strategy to deter artificial streaming involves policies targeting flagged content and raising the minimum track length for noise recordings to two minutes.
Industry figures have expressed support for Spotify’s initiative. Denis Ladegaillerie, founder & CEO of Believe, welcomes the move, stating, “We believe that creating more benefits to develop up-and-coming artists would be a great complement to the institution of a 1,000 stream threshold.”
Kristin Graziani, president of Stem, adds, “All three of Spotify’s new mechanisms redirect funds from the balance sheets of distributors or bad actors back to the artists we serve.”
With over 574 million users, Spotify emphasizes its commitment to distributing over $40 billion to artists and copyright holders. The new royalty model is scheduled to roll out in the new year, impacting the song catalog but not affecting songwriters initially.
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Techrectory with Agency Report.
