“Quantifying the Value of Art”: Musicians Anxious as Spotify Reveals Alterations to Royalty System.

Spotify has officially announced that they will be making changes to their royalty payment system starting in 2024. These changes have been rumored for a long time and include a contentious policy that mandates tracks must reach a minimum of 1,000 listens per year in order to receive royalties.

Some types of “noise” songs, like white noise and sleep sounds, must now be a minimum of two minutes in length. Spotify will charge a new fee to labels or distributors who are suspected of producing fake streams. This includes using bots or click-farms to artificially boost an artist’s streaming numbers and steal royalty payments from Spotify.

Spotify states that the enhancements will generate additional profits for musicians by reallocating funds that were previously allocated to these rights holders or to distributors who do not pay royalties below a certain threshold.

According to Tom Connaughton, the head of Spotify UK, the vast majority (99.5%) of streamed tracks on the platform will continue to generate revenue, with only a small fraction being affected by recent changes. These changes, which have a global impact, are expected to result in an additional $1 billion (£798 million) being distributed to up-and-coming and established artists within the next five years. However, Connaughton acknowledges that there are still some individuals who try to fraudulently claim funds that should rightfully go to deserving artists.

According to the speaker, Spotify will not be gaining any extra profit from demonetizing songs that receive less than 1,000 streams per year. Instead, they will be using the funds from this category, estimated to be tens of millions of dollars, to increase payments to all qualifying tracks.

Daniel Ek, co-founder and chief executive officer of Spotify.

According to Spotify, tracks with less than 1,000 streams do not typically result in significant earnings for the artists. This is because record labels and distributors usually have a minimum payment requirement. As a result, when these small payments do not meet the threshold, the money remains in the bank accounts of distribution companies. The company states that they are not actively withholding money from emerging artists, but rather taking it from idle bank accounts that are earning interest.

However, certain autonomous artists express concerns about the precedent established by the minimum requirement of 1,000 streams.

“I believe 1,000 is an excessive amount,” expresses Brandon Washington, a solo artist from Los Angeles who performs under the name Ando San. “It may be true that there is an abundance of artists on Spotify, but without them, Spotify would not exist. The platform relies solely on the contributions of artists and their music.”

Although he recognizes that fake streams are a major issue, he is skeptical of Spotify’s artist payment structure and the impact this recent announcement will have on the perception of up-and-coming independent artists.

According to the speaker, assigning a numerical value to art can be problematic and may change the perception of what makes a successful artist. They believe that people should be aware of this issue and that Spotify’s impact on the music industry has led to this concern. No matter how many streams an artist has, their music and art should still be valued. As a listener, this could discourage them from using Spotify as a platform for listening to music.

According to Amelia Fletcher, a faculty member at the University of East Anglia and a part of the Centre for Competition Policy, creating art is always meaningful. Regardless of whether or not artists receive compensation for their work, the artistic worth of their music should not be diminished.

She suggests that the streaming service should implement a “user-centered approach” instead of the current method used by companies like Spotify and Apple Music. This alternative would distribute funds from listeners into a single pool and then distribute payments to artists based on their percentage of total streams on the platform.

According to Fletcher, in a model focused on the user, each subscriber’s payment would be divided among the songs they listen to. For example, if a person is a big fan of indie music, the money they pay would be distributed among the indie artists they listen to. The amount allocated per track would depend on how carefully they listen to fewer songs compared to just having music playing in the background all the time.

Competing music platforms Deezer and Soundcloud have recently tested out this strategy through collaborations with major record labels. Fletcher also suggests that a user-based system “could better combat fraudulent activity. If a user is streaming numerous tracks for profit, the earnings for each track would decrease.”

“The policy changes implemented by Spotify will have a lasting impact,” stated a representative from the company. They emphasized that all decisions are carefully thought out and there are no plans to reverse them in the future.

Nevertheless, there is concern in Washington about potential future increases in the threshold. He questions, “What if the minimum requirement becomes 2,000, then 3,000, and even 5,000?” He recognizes that these increases could have a significant impact on many individuals, including himself and other independent artists. In response to these concerns, Connaugton reassures that they are confident in the current threshold and believe it is the best way to support artists and increase their earnings.

As the streaming industry continues to develop, Washington believes that independent artists will need to support each other beyond streaming platforms. He praises Bandcamp, a music company that offers a direct-to-consumer approach by selling downloads and physical releases. Washington believes this is a more effective way to support artists, as it allows for direct communication and opportunities to purchase merchandise and attend live performances. He emphasizes the importance of this kind of support, especially in today’s climate.

Source: theguardian.com