Spotify has officially announced its new policy on royalty payments, confirming earlier reports that the platform would be eliminating payments for songs with less than 1,000 annual streams “starting in early 2024.” The announcement also includes new policies intended to curb fraudulent streams and reduce payouts for “functional noise” content.
Spotify says that “tens of millions” of the 100 million tracks in its library have been streamed at least once but fewer than 1,000 times annually, representing 0.5% of the streamer’s stream-share royalty pool. Based on Spotify’s current per-stream rate, 1,000 annual streams generates around $3, often below the minimum that many distributors require before making payouts to artists. Under the status quo, the money Spotify pays out on those songs remains with the distributor until the threshold for payment to the artists is reached. Under the new policy, Spotify will withhold those royalties and roll them into the stream-share pool, now limited to songs with more than 1,000 streams.
The other major policy changes announced today are targeted at practices the company considers fraudulent: streaming bots and short-form “functional noise” content. Spotify currently removes songs from its library when it detects artificial streams generated from bots or scripts; starting in 2024, the company plans to penalize labels and distributors with per-track penalties when “flagrant” artificial streaming is detected, but did not specify what those penalties would be, or how its tools detect such activity.