FEATURE:
One Zero Zero Zero
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Spotify’s New and Controversial Payment Policy Is Causing Understandable Worry for Many Artists
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IT seems…
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like, when it comes to Spotify, the gulf between smaller and mainstream artists grows ever bigger. It is not enough that major artists can easily make hundreds of thousands (if not more) with each single or album they release to the platform. Think about the realities for smaller artists. I know many do not assume they will get paid a lot and it will be a sustainable method of revenue. It is important that every artist can release their music to Spotify and earn more from it. If subscribers or anyone can access it for free, how fair is it that artists get paid nothing or very little?! In terms of how artists are paid at the moment, this recent feature breaks things down:
“Spotify Royalty Calculators
No royalty calculator is 100% exact, but as an artist, they’re an excellent tool to help you get an idea of how much might be paid out by the platform. In the case of Spotify, the amount you can expect to receive lies between $0.003 to $0.005 per stream. That’s roughly equivalent to a 70/30 split between the rights holders with 70% and the platform with 30%.
Before you pull out your calculator and dream of a fat bank account, it’s important to notice the distinction between ‘rights holders’ and ‘artists.’ Of course, performing artists get their share of the 70%, but what exactly that share is, depends on how their music was produced. Most of the time, the royalties will be split between songwriters, publishers, and the owners of the master recording. The latter could include the artist but may also be the label they’re signed to”.
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The hope was that, in 2024, there would be a review and challenging of the current model. Spotify makes enough profit so that it can revise its payment structure and decide where its profits go. In terms of maintaining the platform and ensuring that it remains affordable to most, many would agree that they could afford to pay a little more for subscriptions. I pay £9.99 a month I think. Even another tenner a month is not breaking the bank! I am not sure how that would equate into profit and whether users would leave the site if they had to pay more. I think most are happy to pay more if it went to smaller artists. If Spotify got that extra slab of money from people using the site, it could be distributed to artists. I also don’t think there have been too many improvements to Spotify in the past few years. In terms of its user interface and design. Its algorithms and discovery tools. It still pretty much feels the same as it did a year ago or so. Not that this is a bad thing. It has a lot of options and a nice design, though there are improvements that could be used - so it is easier to discover and stream newer artists. Less priority to larger audiences. More playlists that combines unsigned or smaller artists. Daily playlists that are broader and deeper, rather than too obvious so that you get stuck in a loop and listen to the same stuff. I do feel like Spotify could also investigate that massive gulf between giant artists and the rest. I used Taylor Swift as an example quite recently. I know I write about her a lot. She is someone I admire greatly, yet I am aware that she gets millions of streams a month. The money she alone makes from Spotify is more than thousands of other artists combined!
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You sort of think, as I mooted before, that a kitty or reserve could be built where major artists could donate proceeds or a proportion of their revenue. It would not damage them too much. Whilst it would not provide sustainable or huge compensation to most artists, it would least be a start! I say all this because, unfortunately, news has come in that provides more doom for artists who do not get a load of streams. The Guardian provide more details about a new development:
“Spotify has confirmed there will be long-rumoured changes to their royalty payments from early 2024, which include a controversial policy requiring tracks to get a minimum of 1,000 listens every year to receive royalties.
Certain styles of “noise” tracks such as white noise and sleep sounds must now be at least two minutes long, and Spotify will levy a new fee on labels or distributors who they deem to be generating artificial streams – where bots or click-farms are used to fraudulently inflate an artist’s streaming figures, and siphon off royalty payments from Spotify.
Spotify claims the improvements will give extra revenue to artists, by redirecting funds that had previously gone to these rights holders, or to distributors that do not send royalties below a particular amount.
Tom Connaughton, managing director of Spotify UK, says: “99.5% of all tracks that are streamed on Spotify will still be monetised; a very small percentage of tracks will be impacted by these changes.”. He says the global changes will “give a further $1bn (£798m) to emerging and professional artists over the span of the next five years … There are still bad actors who attempt to steal money from the pool that should be going to hardworking emerging and professional artists.”
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Of demonetising tracks that earn fewer than 1,000 streams each year, he says: “Spotify will not be making any additional money in this model – what we’re doing is using the tens of millions of dollars that sit in this category to increase the payments to all eligible tracks.”
Spotify have argued that the earnings from tracks with fewer than 1,000 streams rarely reach the artists anyway, because labels and distributors generally require a minimum withdrawal amount. When these small payments don’t meet that threshold, a company spokesman said the payments remain “sat in bank accounts of distribution companies. We are not taking money out of the hands of emerging artists – we are just taking it from bank accounts lying dormant and earning interest.”
But some independent artists are critical of the precedent set by the 1,000-stream minimum requirement.
“I think 1,000 is too much,” says LA-based independent musician Brandon Washington, who goes by the stage name Ando San. “To an extent it’s true that there’s an oversaturation of artists on Spotify. But without them there would be no Spotify – the platform only exists because of artists and music.”
Amelia Fletcher, an academic at the University of East Anglia and a member of the Centre for Competition Policy, echoes this. “Any attempt to make art is valid,” she says. “The fact that lots of people make art and music without recompense doesn’t nullify the artistic value of that music.”
She argues that the streaming giant should adopt a “user-centric model”, an alternative to the current model used by the likes of Spotify and Apple Music where money from listeners goes into a giant pool which is then paid out to artists based on their share of total streams across the whole platform.
In a user-centric model, “each subscriber’s payment would be shared proportionally between the tracks that individual listens to,” explains Fletcher. “So if you have someone who’s really enthusiastic about indie music, that money would get shared out among the artists that they listen to. More would be allocated per track if they listen carefully to fewer tracks than if they just have music playing all the time in the background”.
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It is a situation where a big proportion of artists will earn virtually nothing from Spotify. That ‘defence’ that artists now who get a thousands streams or so do not really see that money anyway is not great! That Bandcamp model where there is more of a direct connection between fans and artists and you get merchandise and physical music seems to make more sense. Whether Spotify employs something like this or not. It doesn’t seem sustainable how things are at the moment. I don’t think it is a case of Spotify reacting to the economy and reality of things. That they cannot afford to give artists more and are ensuring the platform can survive and grow. It seems more of a case of profiteering. The upshot is that more and more artists will either not bother sharing music to Spotify, or they will accept that it is a dead source of revenue. Spotify remains a wonderful platform for discovery and access. At a time when few people can afford to buy albums and invest too much in all the music they want, Spotify is invaluable. There are pros and cons when it comes to Spotify. Many people, when they discuss ways to improve Spotify, concerns playlists and personalisation. I am not sure how that would improve the fortunes or so many artists who are not earning much from the platform. More priority and urgency needs to be on how Spotify can justice imposing a new limit on the number of streams/when artists get paid. Not only does the platform become only profitable and worthy for a small selection of artists, we may see less music being uploaded here. Artists going elsewhere. Conversation will happen around Spotify and why it is going backwards in some ways.
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As the article from The Guardian explores, this new initiative and ruling is designed to take money away from fraudsters. Ensuring that little money is given to noise tracks or those who are not real musicians. Bad actors taking money away from musicians. Their explanation that it is a protective measure:
“Spotify claims the improvements will give extra revenue to artists, by redirecting funds that had previously gone to these rights holders, or to distributors that do not send royalties below a particular amount.
Tom Connaughton, managing director of Spotify UK, says: “99.5% of all tracks that are streamed on Spotify will still be monetised; a very small percentage of tracks will be impacted by these changes.”. He says the global changes will “give a further $1bn (£798m) to emerging and professional artists over the span of the next five years … There are still bad actors who attempt to steal money from the pool that should be going to hardworking emerging and professional artists”.
I guess that makes sense in a way though…what if Spotify set the limit to 2,000 or 3,000 streams?! They can adjust the bar and make their own rules. Also, surely there are technologies that can be introduced to erase and block fraudsters/bad actors and ensure that they detect real artists from those who are not. It is a messy situation at the moment. There has been constant challenging or its royalties and how much it pays artists. In terms of justification, there has not really been any logical or solid rationale. There will be push back against Spotify’s new plans. They need to create a more equitable environment for all artists. When looking ahead to 2024, that needs to be at…
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TOP of their to-do list.