In an effort to address concerns about uneven payouts, Spotify has been updating its royalty system. So how does this new system work and what changes can we expect?
According to Spotify, the issues with payouts are due to three factors: artificial streams, “bad actors” trying to game the system with low-quality recordings, and small payments that don’t reach the artists. To tackle these problems, Spotify’s new policies include charging labels and distributors per track when artificial streaming is detected and implementing restructured monetization eligibility.
Spotify reveals that many tracks have been streamed between 1 and 1,000 times in the past year, generating an average of $0.03 per month. However, due to minimum withdrawal requirements and transaction fees, these small payments often don’t reach the artists. Surprisingly, these “forgotten” payments add up to $40 million per year, which could be used to increase payments to artists who heavily rely on streaming revenue.
So, how much does Spotify pay per stream? Under the new policy, tracks must have reached at least 1,000 streams in the previous 12 months to generate recorded royalties. Spotify emphasizes that there is no change to the overall royalty pool; instead, they will use the millions of dollars previously lost in $0.03 payments to increase payments for all eligible tracks. This translates to approximately $0.003 per stream, or $3 per 1,000 streams. Notably, artists only receive payouts for every 1,000 streams, meaning that 999 streams won’t earn them anything.
Spotify explains that this change will benefit artists who heavily depend on streaming revenue by eliminating smaller payments that never reach them. The majority of streams, around 99.5%, are from tracks that have at least 1,000 annual streams, and these tracks will earn more under the new policy.
Now, let’s talk about how much Spotify pays for 1 million streams. With the new policy, artists would earn around $3,000 for 1 million streams, thanks to the $3 per 1,000 streams rate.
Spotify’s goal with these policies is to “right-size” the revenue opportunity for artists and prevent non-music or spoken word tracks, like white noise or sound effects, from earning the same royalties as music artists. Spotify plans to work with licensors to assign a lower value to noise streams, ensuring that more money goes to musicians and providing more opportunities for legitimate functional sound genres. This approach also aims to discourage tactics like artificially shortening tracks to increase stream counts.
So, if you’re wondering how much Spotify pays per stream, the answer depends on various factors, but under the new policy, it’s approximately $0.003 per stream and $3 per 1,000 streams.