Spotify confirms new royalty system and introduces fines for bot streaming

Spotify has introduced a new royalty policy to combat artificial streams, ‘lost’ payments and abuse with short songs. The company claims the new policy will free up $1 billion for emerging and professional artists.

One of the new measures is that ‘functional noise tracks’ must be at least two minutes long. These include white noise or whale noise tracks that users use as background noise. According to Spotify, some noise makers are now abusing such songs by making them unnecessarily short, such as half a minute long, and then placing them one after the other in playlists. As a result, users listen to more songs than if those songs were longer, which means the sound makers get more royalties.

The streaming service considers this unfair and therefore such noise tracks must be at least two minutes long if the creator wants to receive royalties from them. In addition, Spotify wants to reduce the royalties for such songs ‘to a fraction’ of the value of a music song, in consultation with rights holders.

The second measure concerns ‘lost payments’. Songs that are listened to less than a thousand times earn an average of three dollar cents per month. However, labels often only pay out money to music makers once a certain threshold is reached, such as two to fifty dollars per recording. In addition, there may be transaction costs associated with this from the bank. These royalties therefore often do not reach the music makers, Spotify says.

The amounts involved are relatively small per music maker, but the total amounts to forty million euros per year, according to the company. From the beginning of next year, the company will therefore only pay out royalties if a stream has been listened to at least 1,000 times within a year. The company emphasizes that Spotify will not make extra money from this. The entire royalty pool remains the same; the money therefore shifts to music makers with more than 1000 streams annually.

The last measure concerns ‘artificial streams’ from malicious parties, who use bots to artificially increase the listening figures, so that the streams are better picked up by the algorithm and the stream ultimately yields more. Spotify therefore wants to impose fines from next year on labels and distributors where artificial streaming is discovered. The company does not report how high those fines will be.