How much does Spotify pay artists under its new royalty policies? Here’s what Spotify has to say about it.
As Spotify continues to reign supreme over the streaming-dominant music industry, the company has been busy updating its royalty system to curb criticism over unevenly distributed payouts. So how does this new system work, and what do the policy changes entail?
How much does Spotify pay artists now?
Spotify claims that the issues with payouts stem from three “drains on the royalty pool” that have reached a tipping point. To alleviate these drains — artificial streams, “bad actors” attempting to game the system with “noise” recordings, and small payments that aren’t reaching artists — Spotify’s new policies include charging labels and distributors per track when seemingly artificial streaming is detected and restructured monetization eligibility.
“Tens of millions of (tracks on Spotify) have been streamed between 1 and 1,000 times over the past year, and on average, those tracks generated $0.03 per month,” Spotify says. “Because labels and distributors require a minimum amount to withdraw (usually $2-$50 per withdrawal), and banks charge a fee for the transaction (usually $1-$20 per withdrawal), this money often doesn’t reach the uploaders — and these small payments are often forgotten about.”
But all those so-called “forgotten” payments, Spotify reveals, have added up to $40 million per year “which could instead increase the payments to artists who are most dependent on streaming revenue.”
How much does Spotify pay per stream?
“Starting in 2024, tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties,” says Spotify, adding that the company will not make any additional money under this model.
“There is no change to the size of the music royalty pool being paid out to rights holders from Spotify; we will simply use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments.”
That new Spotify royalty change is equal to about $0.003 per stream, and $3 per 1,000 streams. Notably, artists only receive payout per 1,000 streams — so even 999 streams would bring you nothing.
Spotify explains that this change will enable them to increase payments to “those most dependent on streaming revenue” instead of smaller payments that never reach an artist (due to not reaching distributors’ minimum payout thresholds, naturally). According to Spotify, 99.5% of all streams are of tracks that have at least 1,000 annual streams, and those tracks will earn more under the new policy.
How much does Spotify pay per 1 million streams?
Since Spotify’s policy change earns artists about $3 per 1,000 streams, an artist under this model would earn approximately $3,000 for 1 million streams.
The company asserts that these policies will “right-size” the revenue opportunity for artists and for those who upload “noise” tracks — white noise, nature sounds, sound effects, non-spoken ASMR, and other non-music or spoken word tracks that Spotify does not want flooding the system and earning the same royalties as music artists.
For example, some uploaders have shortened whale sound tracks to 30 seconds, stacked consecutively in a playlist, to minimize effort and maximize stream count. Spotify’s new policies aim to eliminate this tactic.
Spotify says that in the coming months, it will work with licensors to value noise streams at a fraction of the value of music streams, enabling more money to enter the pool for musicians, and more opportunity for legitimate functional sound genres by eliminating the incentive to cut a track artificially short to garner revenue.
As the new initiatives roll out into the new year, Spotify says it will continue to update the public along the way, encouraging those interested in the specifics of Spotify’s royalties to visit its Loud & Clear website.