Spotify has formally unveiled its latest royalty payment policy, confirming previous speculations about the elimination of payments for songs accumulating fewer than 1,000 annual streams. The stratagem is set to take effect in early 2024. In addition to this significant change, the streaming platform has introduced measures aimed at combatting fraudulent streams and reducing payouts for what it terms “functional noise” content.
According to Spotify, a substantial portion—tens of millions—of the 100 million tracks in its library have been streamed at least once but fall short of the 1,000 annual streams benchmark. This accounts for just 0.5% of the platform’s stream-share royalty pool.
Given Spotify’s existing per-stream rate, the earnings from 1,000 annual streams hover around $3, frequently below the minimum many distributors require for artist payouts. In the existing model, the funds Spotify allocates for such songs remain with the distributor until the payment threshold for artists is met. Under the updated policy, these royalties will be retained by Spotify and integrated into the stream-share pool, which, moving forward, will exclusively encompass songs with over 1,000 streams.
Spotify’s latest policy also targets practices the platform considers fraudulent, including streaming bots and brief “functional noise” content. While Spotify currently eliminates songs from its library upon detecting artificial streams generated by bots or scripts, the platform plans to impose per-track penalties on labels and distributors for “flagrant” artificial streaming starting in 2024. However, specific details regarding the nature of these penalties and the tools employed to identify have not been disclosed.
Moreover, Spotify aims to address what it perceives as “bad actors,” producing short-form noise tracks, such as whale sounds, ASMR, and white noise, and strategically placing them in playlists to garner what it deems “outsized payments.”
Under the existing framework, Spotify compensates these noise tracks at the same royalty rate as traditional music, leading to scenarios where a 100-track playlist of 30-second noise tracks earns more than a 10-track playlist of five-minute music tracks despite having the same total content duration.
To rectify this, Spotify intends to raise the minimum length required for “functional noise recordings” to qualify for royalties from 30 seconds to two minutes (Vulfpeck’s famous LP Sleepify is comprised of 10 roughly 30-second-long tracks).
Additionally, the platform plans to collaborate with licensors to assign a fraction of the value of music streams to noise streams, although specified were not shared by Spotify.