Per a new estimate, the controversial Spotify stream minimum cost emerging artists big, to the tune of $47 million in would-be royalties, during 2024. Photo Credit: Towfiqu Barbhuiya
By one industry exec’s estimate, Spotify’s 1,000-play monetization minimum cost emerging talent close to $50 million during 2024. Now, the platform is defending its controversial royalties approach.
As many know, that approach sees Spotify pay recording royalties only for tracks with at least 1,000 annual streams. Implemented (along with other changes) at the behest of the majors, the revamped model is effectively preventing the vast majority of uploaded recordings from generating payments.
We know as much in part because of Luminate’s latest year-end report, which found that just 26.7 million works (not necessarily proper songs) had topped 1,000 global on-demand streams last year.
In light of the 202 million ISRCs identified in the same breakdown, this means some 87% of tracks failed to hit Spotify’s 1,000-stream minimum. Technically, these plays were divided across all DSPs; the percentage of recording-royalty-accruing works on Spotify might actually be lower than 13%.
And when it comes to the monetized pile of Spotify uploads, it’s also unclear how many of the works are human-made songs. Logic and a bit of evidence suggest AI “music” generations are (presumably thanks to the efforts of their uploaders) having no problem hitting 1,000 streams apiece each year.
But that multifaceted topic is best saved for another time. More immediately, Disc Makers CEO Tony van Veen crunched the streaming numbers to arrive at the initially mentioned estimate.
“I’m going to answer this question: How much in royalties earned by independent artists in 2024 did Spotify not pay out to you, the independent-artist community?” van Veen asked in a YouTube video.
Building on Luminate’s 2024 stream-volume pyramid, which groups tracks by play range (93.2 million works had between zero and 10 streams, for instance), van Veen attached “conservative” estimates to each category.
For the bucket of uploads with 10 or fewer streams, that refers to an average of two streams per track, against an average of 350 apiece for those with between 101 and 999 plays on the year.
The exec then used the figures to approximate total non-monetized streams, brought an average per-stream royalty rate of $0.0033 into the fold, and multiplied to arrive at an estimate of the would-be royalties.
All told, emerging artists missed out on $46.87 million in recording royalties during 2024, van Veen found.
While it probably doesn’t need saying, the situation is inherently beneficial for well-established acts and the major labels.
Factoring also for the majors’ advantageous DSP agreements and the ongoing tidal wave of AI tracks (commercially prominent artists needn’t worry about ending up at the bottom of the pile), it’s apparent that the indie community is receiving an increasingly raw streaming deal.
Like with AI audio’s precise streaming-service reach, this topic is best left for a different occasion. As things stand, Spotify, as highlighted, is firing back against criticism of its 1,000-stream minimum.
“99.5% of all streams are of tracks that have at least 1,000 annual streams,” a Spotify spokesperson retorted in part, “and each of those tracks earn more under our policy. This policy targets the population of tens of millions of tracks on Spotify that generate only $0.02 per month on average.
“In the aggregate, these tracks with under 1,000 annual streams represent ~0.5% of total streams (and therefore 0.5% of the total royalty pool). Now that Spotify’s royalty pool has become so large — $10B+ in 2024 alone — 0.5% is a material amount,” the rep proceeded.
Content shared from www.digitalmusicnews.com.