Publishing News

Spotify Announces Official Policy Regarding Royalty Payments, “Artificial” Streams, and “Functional Noise”

Nov 29, 2023

Spotify has officially disclosed its updated royalty payment policy, confirming the elimination of payments for songs with fewer than 1,000 annual streams, effective early 2024.

This decision aims to address the challenge posed by a significant number of tracks (representing 0.5% of the platform’s stream-share royalty pool) that have been streamed at least once but fall below the 1,000-stream threshold. Previously, such payments remained with distributors until the artist payout threshold was met. However, under the new policy, these royalties will be withheld and merged into the stream-share pool, which now exclusively includes songs with over 1,000 streams.

Additionally, Spotify intends to combat fraudulent practices such as artificial streaming through bots. Starting in 2024, the company plans to penalize labels and distributors for “flagrant” artificial streaming, though specific penalties and detection methods were not detailed.

Another focus is on reducing payouts for short-form “functional noise” content, like whale sounds and ASMR (autonomous sensory meridian response), by increasing the minimum length for these recordings to generate royalties from 30 seconds to two minutes. Spotify also aims to work with licensors to value noise streams at a fraction of the rate assigned to music streams, but the specific fraction and criteria for defining functional noise tracks were not specified.

These policy adjustments are said to respond to challenges posed by low-streamed songs, fraudulent streaming, and the unequal compensation of short-form content, reflecting Spotify’s efforts to ensure fair and transparent royalty distribution.