It was revealed last month by Music Business Worldwide that significant adjustments to Spotify’s royalties structure would take place in Q1 2024. Which of the alterations is the most contentious? a new minimum yearly stream requirement before any song on the service begins to earn royalties.

We were unable to confirm an exact figure for this minimum requirement at the time of our research. We can now: One thousand plays.

The news was initially mentioned in a guest post written by Kristin Graziani, President of the distribution platform Stem, which was released on Thursday, November 2.

According to individuals with direct knowledge of discussions between Spotify and music rights holders, 1,000 plays will be the minimum annual play-count amount that every song on the service must reach in order for royalties to begin being paid out starting in the first quarter of 2024.

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Additionally, Spotify has recently reiterated to record labels and distributors what goes on behind the scenes in this regard: “To [demonetize] a population of tracks that today, on average, earn less than five cents per month,” according to the statement explaining the action.

200 plays on Spotify in the US can currently earn five cents in recorded music royalties.

With this change, Spotify hopes to de-monetize some of the songs that previously accounted for 0.5% of the “Streamshare” (or “pro-rata”-based) revenue pool on the service.

Spotify has informed stakeholders in the industry that it anticipates reallocating tens of millions of dollars annually from the 0.5% to the remaining 99.5% of the royalty pool as a result of the new 1,000 plays minimum yearly threshold.

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Spotify projects that by 2024, tracks with more than 1,000 streams will receive $40 million instead of the $40 million that would have been given to those with fewer than 1,000 streams.

According to a source familiar with Spotify’s discussions with music rights holders, the aim of this is to target royalty payouts that are losing value due to being reduced to small amounts, such as pennies or nickels.

“Most of the time, these micropayments never make it to the hands of real people; aggregators usually want a certain amount of [paid-out streaming royalties] before they let independent musicians take their money.

READ MORE: What Does Spotify Pay For One Million Streams? In 2023, The Answer Is Downright Depressing

“We’re talking about songs whose Spotify royalties are sitting idle in bank accounts because their royalties aren’t reaching those minimum levels.”

Ladegaillerie explicitly stated that she disagreed with the notion of music streaming services having a 1,000-stream lower limit on income.

“Why would you not pay such an artist [if they received fewer than 1,000 streams]?” he said. That defies logic in any way.

“If the music industry moves in that direction, what message do you send to aspiring artists?”

READ MORE: Spotify Is Fined $5.4 Million In Sweden For GDPR Violations

If Quintero had been financially disheartened in [his early career] by a Spotify-like system, might he have been so dejected as to give up?

If the minimal payout threshold of up to 1,000 streams annually is all that’s being discussed? Most likely not.

What would happen, though, if that cutoff point were to rise to, say, 10,000 or 20,000 streams in the future? Who knew?

Narratives such as these underscore the significance of the major streaming services in the music business, Spotify in particular, finding the correct equilibrium between penalizing [so-called] “garbage” and protecting the budding talent of the future.


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