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Spotify’s New Royalty Policy for 2024

Understanding Spotify’s New Royalty Policy for 2024: Navigating the Changes

In a significant shift, Spotify is set to update its royalty policy in early 2024, introducing a new threshold for tracks to generate royalties. This change represents a pivotal moment in the streaming landscape, impacting how artists and rights holders receive their earnings from the platform.

Spotify’s New Royalty Threshold

Starting in 2024, a track must accumulate at least 1,000 streams in the previous 12 months to qualify for royalty earnings on Spotify. This development is part of a suite of changes aimed at optimizing the distribution of smaller payments that often remain unclaimed or overlooked under the current system.

The Reasoning Behind the Change

Spotify’s initiative stems from a desire to better allocate small payments, which often don’t reach the artists due to minimum withdrawal limits set by labels and distributors and transaction fees charged by banks. According to Spotify, this issue has resulted in disregarded payments totaling $40 million in 2022.

Understanding the Unique Listener Requirement

An important aspect of this new policy is the introduction of a minimum unique listener requirement for tracks to be eligible for royalties. While Spotify has not disclosed the specific number to prevent system manipulation, this measure aims to deter artificial streaming.

How Royalties Will Be Calculated

Under the new model, Spotify clarifies that there will be no change in the overall size of the music royalty pool. Royalties will be calculated based on stream share, considering only those tracks that meet the 1,000-stream threshold. This means a track becomes eligible for royalties from the first month it reaches this threshold, but not for streams from prior months.

Eligibility Dynamics

Tracks can fluctuate in and out of eligibility based on their streaming performance over time. Each month, Spotify will evaluate which tracks have achieved the required number of streams in the past 12 months to be included in the royalty calculations.

Key Changes in Spotify’s Royalty Policy

AspectCurrent PolicyNew Policy (Starting 2024)
Royalty ThresholdNo minimum stream requirement1,000 streams in the previous 12 months
Unique Listener RequirementNot applicableMinimum unique listeners (number undisclosed)
Royalty CalculationBased on total stream shareOnly eligible tracks considered for stream share
Fluctuation in EligibilityNot applicableTracks can gain or lose eligibility based on streams

Implications for Artists

These changes underscore the importance for artists to actively engage their audience and promote their music to consistently meet the new streaming criteria. The updates reflect a shift towards rewarding tracks with sustained popularity, encouraging artists to focus on long-term engagement strategies.

Spotify’s 2024 royalty policy update marks a significant evolution in the streaming ecosystem, emphasizing efficient royalty distribution and deterring artificial streaming. For artists and rights holders, understanding and adapting to these changes will be crucial in maximizing their streaming revenue in the coming years.

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