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  • Writer's pictureTobi

Generation Silenced: Spotify's New Royalty Threshold

Updated: Jan 8

Introduction: Once Upon a Record Store

Once upon a time, there was a place called a record store; and in there we would go, to flick through the racks of CDs and Vinyl.  We’d scan across eye catching artwork before eagerly flipping over to read the credits and notes.  Hasty calculations were made as to what we could afford, and then they were ignored, as we handed over crumpled notes and coins.  Having just enough money left for the bus home, we headed out.  Our newly discovered music stashed in a plastic bag, knocking against our legs as we hurried to the bus stop.

Record Store

Chapter 1: B Side of the Record Store

Of course, that’s only half the story.  Few bands and artists could access the necessary recording equipment.  And fewer still could achieve any kind of distribution without the backing of an established indie label.  The mark-up on CDs was criminal.  And such was the power of the major labels, cultural juggernauts like MTVs daily rotation and payola scams meant the industry could force feed us selected artists.

Chapter 2: Scramble for Value

Affordable recording technology and distribution, coupled with the discoverability of streaming’s algorithm-driven playlist-based ecosystem means we hear a much wider variety of artists and bands than we used to.  There are, indeed, things to celebrate in this new era of access and accessibility, not least as it arrived in the aftermath of torrent and file-share, and Apple’s legitimizing of lossy codecs and download, rendering music cheap and disposable.

Streaming Music App on Phone

But while the major label’s revenues may be returning to the price gouging glory days of CDs, the independent music scene is still scrambling for value.  Streaming has done little, if anything, to improve the value-perception of unsigned and grassroots music.  And Spotify, ever the leader in all things good, bad and ugly about streaming, is set to make it much worse.  

Chapter 3: Disenfranchised

Spotify clearly wants to downplay the negative impact of its new royalty threshold, explaining, “99.5% of all streams are of tracks that have at least 1,000 annual streams”.  In reality though, and this is according to Spotify’s own data, in 2022, the number of tracks on its platform that had been streamed less than 1,000 times was 47.7 million.  With that in mind, when we consider how many more tracks are likely to fall short of Spotify’s new royalty threshold, the number of artists that will be financially disenfranchised is massive.

Chapter 4: Nothing for Money

While it is true that distributors like Distrokid set a minimum payout threshold, Spotify is not doing this. It is not putting royalties to one side until tracks reach a streaming threshold.  It is rendering all royalties worthless when a track fails to reach the 1,000 streams threshold, and it is doing so on a year by year basis.

Small Band Playing

If a track earns 900 streams in year one, the streams will be deemed worthless.  If that same track earns 900 streams in year two, the streams will be deemed worthless.  If an artist has 20 tracks, each earning between 500 - 900 streams in year one, all of those streams will be deemed worthless.  And so on for year two, year three, and onwards.  The artist will earn nothing.

This will make it even harder for grassroots independent artists and bands to reach the minimum payout thresholds set by distributors.   

Chapter 5: The Professionals

The implication of Spotify’s self-described drive toward emerging and professional artists is clear.  Any artist who struggles to achieve 1,000 streams a year per track can not be very good.  

Comparisons between the days of CDs and the age of streaming are often clumsy and overly simplistic, but, for those of us who are old enough to remember, take a moment to think about how many CDs you’ve played over 1,000 times, or 500 times, or 100.  Now consider how many CDs you own that you’ve only played a handful of times, perhaps only once or twice.  There will be grassroots artists and bands on Spotify that have compelled their small number of fans to listen to their songs 100s of times, but as of the beginning of next year will see no earnings.

Spotify is eager to present this new royalty threshold as good for independent artists.  But when we consider that only 1% of the artists on Spotify account for around 90% of the streams, it becomes clear that the overwhelming majority of the purported $40 million will go to the major label artists. 

Chapter 6: Generation Silenced

It is astonishing how little is made of the fact that an entire generation of music-makers were financially disenfranchised by torrent and file-share.  There has been very little outcry, and even less support offered in light of the emotional/psychological damage rendered as the world collectively deemed music to be without value.

Old piano in abandoned building

It is against the backdrop of unhealed wounds that Spotify will invalidate the music of millions of grassroots artists and bands.  Artists and bands that have worked hard, but struggled to attract listeners to their music in a world flooded with competition for our eyes and ears.  They have not resorted to fake streams, pay-for-placement, or streaming farms, though Spotify’s threshold may well drive some of them to doing just that.

Once upon a time we valued music.  And many of us still do.  In these coming months and years, as the industry works to silence another generation of artists and bands, we who value music must make noise.  

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