Spotify Changes How It Pays Out Royalties To Try To Stop Scams; Upsets Indie Artists In The Process
from the deep-levels-of-mistrust dept
A few weeks ago we had a story from Glyn Moody about how some people were effectively spamming music streaming services like Spotify with “functional music,” tracks designed to get plays solely for the sake of royalties. Glyn, reasonably, called for an “overhaul,” in how these systems worked.
And apparently some people were thinking similarly? Last week, the site Music Business Worldwide broke the news that Spotify was getting ready to change its royalty payout system with an eye towards reducing payouts to those more scammy uploads.
As one source put it, Spotify is planning to execute these changes in an attempt to “combat three drains on the royalty pool – all of which are currently stopping money from getting to working artists”.
In short, the three changes are:
- Introducing a threshold of minimum annual streams before a track starts generating royalties on Spotify – in a move expected to de-monetize a portion of tracks that previously absorbed 0.5% of the service’s royalty pool;
- Financially penalizing distributors of music – labels included – when fraudulent activity is detected on tracks that they’ve uploaded to Spotify; and
- Introducing a minimum length of play-time that each non-music ‘noise’ track must reach in order to generate royalties.
If your goal is to reduce the ability to spam the system just to get royalties, this seems like a potentially viable first step.
However, I only found out about this story after seeing some indie musicians on social media decrying how Spotify was clearly doing this to shovel more royalties to bigger artists and away from indie artists. Indeed, that appears to be the way that the popular music site Stereogum framed the news.
The labels that supply Spotify with music will have to agree to all these changes, but Billboard claims that the major labels are all likely to sign on because they’ll make more money from these changes. In an earnings call in July, UMG CEO Lucian Grange reportedly announced a “newly expanded agreement” with Spotify, claiming that it’ll be “artist-centric” and that it’ll benefit “real artists with real fanbases.”
Since the vast majority of independent artists presumably will not reach that 0.5% threshold, though, I have to wonder whether the smaller labels will see any point in keeping their music on Spotify. Streaming services like Spotify already have a reputation for pushing listeners toward music that’s already massively popular, and it seems that this new arrangement will only increase that tendency. The income gap between big stars and smaller acts is already huge, and this change could make that gap a whole lot larger.
Reading through the details… and I think Stereogum is misreading a whole bunch of details. The agreement in July appears to have been with Soundcloud, not Spotify, and was something different. And there’s no “0.5% threshold” in the new setup as far as I can tell. Spotify is claiming that approximately 0.5% of their current royalties are going to those scammers pushing “functional music” files just to get royalties and so it’s seeking to reallocate that to actual artists.
That said, you can certainly understand why artists would be wary. The whole “give more money to largest artists while screwing over the indies” is basically how much of the music industry has worked for years. Collection societies spent years arguing that it was just too hard to accurately divvy up money they collected to smaller indie artists, and therefore they just had to dole it out to the largest stars.
So, yeah, I can totally understand why indie artists are quite nervous that Spotify (over which the major labels have significant control) might be going down the same path. If Spotify is smart, it will be extremely transparent in explaining the details of this new royalty system, and how it will impact indie artists in particular.
Filed Under: functional music, indie artists, music streaming, royalties, scams
Companies: spotify
Comments on “Spotify Changes How It Pays Out Royalties To Try To Stop Scams; Upsets Indie Artists In The Process”
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Who cares about dirty hippy “indie artists” anyway? They’re lucky to get any compensation for their “art” and should, in fact, go get real jobs.
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Some of those indy artists did.
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My thoughts exactly, except about non-indie “artists” (businesses).
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A lot of the bands you consider to be relevant, over history. You’d be amazed at which music you like that was really just covers or imitations of bands you never heard of.
I can’t believe anyone pays for this shit. Soulseek has everything you could ever want, and there’s YouTube if you’re feeling lazy and want a quick stream.
Indie creators
This is the key point. If my band makes great music in low quantities, I’ll be driven off the site.
It also reminds me of when YouTube decided you needed 1,000 followers to monetize. OK, they were solving a problem, but they took supplementary income away from many part-time creators. Sites that used to be supportive of hobbyists and part-timers have become less so, and this is just another example. That’s bad for flexibility, innovation, and stability.
They’re probably mixing that up with the
Introducing a threshold of minimum annual streams before a track starts generating royalties on Spotify – in a move expected to de-monetize a portion of tracks that previously absorbed 0.5% of the service’s royalty pool ?
I think they’re just shorthanding, because earlier in the Stereogum article they explicitly say ‘“will de-monetize tracks that had previously received 0.5% of Spotify’s royalty pool.”
That said, I can definitely see how a minimum threshold would make smaller artists nervous.
A few weeks ago we had a story from Glyn Moody about how some people were effectively spamming music streaming services like Spotify with “functional music,” tracks designed to get plays solely for the sake of royalties
And I’ll tell you what I said then: there is absolutely no evidence that this problem exists. The claim originated from the mouths of large music publisher executives (Warner Bros, for Glyn Moody’s article), and is being bandied about by media organizations as if said executives couldn’t possibly be lying to benefit themselves.
You’ve written before about issues with media organizations repeating whatever businesses, governments and others say without bothering to check if those things are true or just self-serving hallucinations, but I guess that was more of a “do as I say, not as I do” type observation. My disappointment is measurable, and my day is mildly worse.
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You have researched this and can present the facts then?
Meanwhile, there are a lot of people complaining about this very issue on how they have gotten recommendations for songs that are very short with odd names that just contain generic crappy music.
The simple answer to why you think “there is absolutely no evidence” is that you have either ignored it or you haven’t actually looked for it.
So.. As others noted there is the new minimum streams threshold.
Which, when you really look at it is them simply serving content to people but then NOT paying the artist for it.
It might be small change in the scheme of things but it’s still Spotify pocketing money they made from someone else’s work.
Great, now musicians who need the money won’t even get the fractions of a cent for their work. Boy, disruptive tech sure is going great!
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As someone who was in bands in the ’80s and ’90s, “tech” has nothing to do with it. Music has never been lucrative unless you’re a) a massively successful band (and even then sometimes not), or b) an instrumentalist working daily as an entertainer, like many of my Vegas and New York friends are.
For the vast majority of people who play music, it’s a hobby, not a job or a money-making venture.
This is how it’s been since the beginning of time, and how it will always be.
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And how it should be. I don’t know why people are set on making all creativity into a business decision.
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Also, for most people, music is just a background noise louder than the ambient noise, they just don’t care about how much passion has been put in it.
And for indies, there is music lovers, that could spend one hour a day listening to any music to find what they really love. And won’t be bored after one week when a new album will be released. They pay for music (CDs or vinyls, concerts, goodies, etc.), not for services.
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They didn’t in the 60s either.
There are many questions...
As a very minor streamer I stand to lose out from this. Not a lot of course because the numbers are small, but at the moment my streaming payments just about cover my aggregator costs. Take Spotify out of that (I don’t hit 1000 plays per track per year generally) and that takes out the bulk of that.
So that they can redistribute it to bigger artists. Hmm. Gee thanks.
There definitely seems to be a disconnect
If enough people are deliberately streaming small artists and functional music to account for 0.5% of revenue, isn’t that just… what people want?
Conversely, if the problem is that some scammers are spamming the system and deceiving people into listening to their audio, wouldn’t a more direct solution be to flag + review newer accounts with suspicious behavior, maybe put a few month hold on payouts to new accounts?
Seems like not the best solution to just say “Your music isn’t worth anything if you’re too small”
This article was written before Spotify clarified the new programs, and basically confirmed all of the above. The constant use of terms like “scammy functional music” leaves legitimate New Age producers in the wind. Spotify itself has heralded some of the functional music categories, and even created very popular playlists to promote them… now suddenly everyone cries “scam.” I call bullshit. This is simply the major labels, once again, forcing their own agenda. They’re only ever for things that make them more money. Period. And also… why the hell does Lucian Grange get to the arbiter for the entire music industry as to what a “real” artist is or is not. What a sad state of affairs. I wish Spotify had the backbone to tell them no. If Lucian is worried about functional music eating away at his (record breaking) profits… then as the world’s largest label group, you’d think it’d be quite easy for them to launch a funtional music label and blow everyone out of the water anyway. Fucking cowards.