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.