Billion dollar windfall? Spotify to update how it pays rights holders

Music streaming giant Spotify said Tuesday it will modify how it pays artists in 2024, introducing a minimum number of times a piece must be streamed before qualifying for royalties.

With its announced changes, Spotify estimates it can generate around a billion dollars in additional revenue for artists over the next five years.

The world's largest music streaming platform said on its website for artists that it plans "to further deter artificial streaming, better distribute small payments that aren't reaching artists, and rein in those attempting to game the system with noise."

From early 2024, Spotify will require a minimum of 1,000 streams over 12 months before paying out royalties.

The platform said that below this threshold, songs generate on average three cents per month and do not end up reaching rights holders, even though they add up to total sum of $40 million.

"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," it said.

A global study at the start of 2023 estimated that between 1 and 3 percent of online listening was fake, based on 2021 data in France from the Centre national de la musique (CNM).

Another change to Spotify's remuneration system will be to tighten conditions for the payment of royalties for non-musical "noises", such as sounds of animals or nature.

These tracks will have to be at least two minutes long, and Spotify will discuss with the rights owners how “to value noise streams at a fraction of the value of music streams.”