I've seen a few videos recently where they claim that Spotify will, in 2024, stop paying small artists that do not earn beyond a certain threshold. I haven't seen this discussed elsewhere except for youtube, and I'm just curious what other people in the industry have to say about it. For myself, I will not subscribe to their service any longer if they go ahead with that.
Here’s an article on the topic that’s a bit more even-handed: https://www.theguardian.com/music/2023/nov/22/spotify-announces-royalty-changes
Spotify typically pays between $.003 and $.005 per stream, according to https://labelgrid.com/blog/royalties/spotify-pay-per-stream/, so limiting payment to a minimum of 1000 streams per year therefore translates to a minimum annual payment of $3–5. I have some background here—my company (among other things) sells digital assets made by others, and many years ago, I helped design the methods and systems we use for that. And one thing I had to contend with is that there is such a thing as “too small to be worthwhile.” In those early days, we paid creators by check, and each check cost some money to process: in addition to the material cost of postage and an envelope, there’s also the cost of the accounts payable person handling the payment, the accountant reconciling the books, and so on. These days, most of the payments are electronic, so the postage and envelope costs are gone, but you still have to pay someone (like PayPal) a fee to deliver that money. It doesn’t add up to a lot, but when you’re talking about small payments, you’re also talking about small revenues, and it’s pretty easy for the act of paying the creator of a minor product to nullify any profit you might make on it. So you’ve got to do something here. That said, I’m not a fan of Spotify’s solution. Even if it’s just $3, that creator still deserves that $3–but you do have to make sure it’s worthwhile for you (and them) to get it to them. The solution we used was just to set a minimum on automatic payments: We’d automatically pay creators every month, or quarter, or whatever… as long as that payment met a minimum that we determined was worthwhile for us to process (I think we decided on $5). If a creator didn’t make that minimum, we let their balance accrue for however long it took until they hit the minimum, and then we paid out. If a creator wanted to be paid whatever we owed them before it hit the minimum, they could contact us and we’d do that… but odds are good that we’d also reexamine their account at that point to make sure it was actually worth carrying their content. If I were Spotify, I’d probably look at something like “if, after a year, you haven’t accrued at least $5, we’ll pay you what we owe you, and then we’ll drop you.”
Music has become nearly worthless. No wonder major acts are cashing out to Primary Wave and the like. People with tremendous talent are already second-guessing making music their chosen field. Is it any wonder? Ed
Yes this definitely sucks... I'm sure my band will be one of those who no longer gets the meager payments they send. Grrr...
The not so nice side of streaming. $.003 per play? That's next to nothing. Who actually started that rule?
It’s probably based on the users that won’t pay more than $10-$20 a month no matter how much they stream. Oh wait…that’s us.
Very true. They'll need to break the 1000 play threshold to get a percentage of what the normal pay out is, or 10,000 plays get the full percentage. Essentially it's not worth the hassle for Spotify making millions of transactions that are under a dollar...They are hurting no musicians real income, hence it being a dollar or so, and saving themselves millions.
Not saying this is good or right, just from their perspective what they are doing as a business operating within legal terms. Until royalty laws catch up with modern music consumption, artists will continue to get screwed in the streaming age. The royalty laws are still operating under radio plays and copyright protections from like the 50's. I think very very little has been changed other than how those laws would "Translate" to today. I also don't think anyone understands what a "play/click" means. How many seconds does one need to listen before it's a full play? Partial play etc? Who is documenting all that and paying out the percentages properly? Essentially there are more ways than ever to get your music "out there", but if a song is played in the forest and no one is there to listen, was the song ever really played?
Most platforms that artists can use to get their music on spotify (and other platforms) have a minimum amount of money you have to earn to be paid (usually around 20 bucks or so). Which is understandable and fair, I think, because there's no time limit. So if you need more than a year to earn 20 bucks - no problem. But with spotify's new rule that is no longer possible. You can have 999 plays each year and will never get paid.
Spotify is making no such transactions because they aren't paying artists, they are paying the distribution platforms that artists have to use to get their money on spotify. And that will remain the same, just as the money will remain the same, it will just be distributed slightly differently, excluding very small artists entirely.
If it's the payment processing that is causing the problem, I wonder if it wouldn't be possible to turn the meagre profit into credit against Distrokid (et al) costs or toward Spotify monthly fees. I use Distrokid to put my songs on all of the streaming services. They do a great job and with the touch of a mouse my songs are on Spotify and all the others. This costs me $20 a year. If Spotify could create a way of crediting artists - even if it was just adjusting my monthly Spotify fees, that would be fairer than erasing all gains.
So just where does all this 'uncollected money' go?.... I smell a future class-action-lawsuit, representing thousands of unpaid musicians.... I'd rather see the lawyers get the money than Spotify keeping it.
and this: "Spotify explained exactly how this will work in its blog post on Tuesday (November 21). Starting early next year, “tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties”. Spotify confirms details of how its royalty model will change in 2024 - Music Business Worldwide
Read the Guardian article I linked in the second post. Spotify said: “Spotify will not be making any additional money in this model – what we’re doing is using the tens of millions of dollars that sit in this category to increase the payments to all eligible tracks.”
Spotify is providing a service. If the user does not like the terms, they are free to not use the service. There is absolutely no chance for a lawsuit that would not be immediately laughed out of court.
I've seen many book publishing deals that say if the author doesn't earn at least X during an accounting period, the publisher has no obligation to send a statement. I always struck those b/c without a statement the author has no idea how the publisher is accounting for revenue. It may not be thievery, but simply how they account for royalty splits, returns, promo copies, advances, etc. To know that information is critical from the author's standpoint. So, while the overhead cost of accounting for de minimis royalty payments may exceed the actual royalty payment, it is a vital source of information. Most publishing deals in book are life of copyright, too, unlike music licensing arrangements, which are often term limited. Typically, if talent doesn't earn, it gets dropped anyway. But earned revenue cannot be ignored-- unless the premise going in is that "we'll feature you in some playlists to give you exposure on a non-paying basis, with the understanding that we have the right, within Y period, to offer you/sign a deal." No legal advice intended.
