Rethinking Royalties: Spotify’s New Streaming Threshold

Spotify, the leading music streaming service, is on the brink of implementing significant alterations to its royalty payment structure. The change is aimed at addressing 3 key areas: the earnings of low-streaming acts, the categorisation of non-music tracks, and the issue of fraud by distributors and labels.

Of the proposed regulations, our focus today narrows down on one change: the introduction of a minimum 1,000 streams within the preceding 12 months to be eligible for royalties. Spotify’s stance on this change is clear: the platform asserts that it will not increase its revenue; instead, it will redistribute the existing music royalty pool more effectively, which remains unchanged in its total value. Notably, Spotify indicates that 99.5% of all streams on its service are of tracks that already surpass this 1,000-stream benchmark annually, consequently standing to gain more.

In this post, edited by Knowledge Exchange Officer Arthur Ehlinger, CREATe researchers explore what this new policy might mean for the ecosystem of music creation and distribution.