Spotify just lately rolled out a quiet however seismic change to its royalty system: if a monitor doesn’t get at the least 1,000 streams in a 12-month interval, it earns no royalties. Zero. The corporate claims this coverage is about lowering “fraud” and redirecting cash to “working artists,” however behind that PR gloss is a shift that disproportionately harms impartial musicians and smaller rightsholders.
Let’s be clear—this isn’t nearly eradicating noise from the system. It’s about redrawing the map of who will get paid within the streaming economic system and who will get pushed out.
The Hidden Influence on Artists
At first look, 1,000 streams would possibly sound like a modest hurdle. However within the combination, this threshold excludes probably tens of millions of tracks from ever receiving a dime—though Spotify continues to revenue from their presence by way of advert income and consumer engagement. It’s simple to imagine the affected tracks belong solely to DIY artists or obscure creators. However that’s not essentially true.
Spotify’s royalty mannequin is track-focused, not artist-focused. You possibly can have a single that racks up 1,000,000 streams whereas the remainder of the album struggles to clear a couple of hundred. These lower-performing tracks—regardless of being a part of a cohesive launch—gained’t earn a cent. Left to its personal units, the platform favors particular person monitor efficiency over albums or an artist’s total catalog. And that has sweeping implications not just for how artists are paid, however for a way music is created, launched, and valued within the streaming age.
It’s Not About Rising the Pie—It’s About Slicing Out the Backside
Essentially the most revealing a part of this coverage isn’t what it claims to repair, however what it quietly avoids. Spotify is probably going beneath huge stress—from main labels and rights holders—to lift the artist payouts. Irrespective of how a lot Spotify denies the per-stream price, there’ll at all times be a per-stream price even when they pay a “stream share” to a label for the quite simple motive that the label has to transform that income share right into a per stream price as a way to allocate it to their a number of artists. That’s so simple as gross vs. internet.
Plus we all know simply how unhealthy the gross is from indie artists who receives a commission 100% of the “stream share”. It’s shit, okay? That’s why we all know Spotify are beneath stress to extend royalties.
However arbitrarily elevating the entire royalty pool would have penalties: it may set off most-favored-nation clauses, obligate Spotify to pay extra throughout the board.
One other method to increase royalties can be to “flatten” a few of the minimal assure, i.e., make a portion of it nonrecoupable from future royalty funds. This was the observe with file golf equipment—a nonrecoupable fee has the additional benefit of not being shared with artists as a sort of catalog-wide fee. This may additionally doubtless set off MFNs, in order that’s not tremendous interesting both.
So by excluding low-performing tracks from the royalty pool, Spotify isn’t lowering fraud or growing equity. It’s reallocating income. And never randomly—it’s redistributing it upward. The cash these artists would have earned is now being handed to the top-performing tracks, which overwhelmingly belong to main labels and huge catalog homeowners.
Don’t you assume that if the purpose was to cut back prices, Spotify would simply shrink the pie and pocket the distinction? It appears to me that more cash to fewer folks is probably going the true objective of the 1,000-stream rule.
The Menace of Trade-Huge Collusion
Spotify isn’t alone. Amazon Music and Deezer have launched comparable thresholds, elevating severe issues about whether or not this can be a coordinated transfer by dominant platforms to marginalize smaller rightsholders. When a number of main providers undertake the identical gatekeeping metric on the similar time, and profit in the identical approach, it’s not unreasonable to ask whether or not they’re performing in lockstep. In reality, this idea in antitrust legislation is named tacit collusion (or “acutely aware parallelism”) which happens when opponents coordinate their habits—similar to pricing or output—with out specific agreements or communication. As a substitute of coming into into a proper cartel, firms mirror one another’s pricing or enterprise methods, figuring out that mutual restraint advantages all of them
Even when there’s no smoking gun, the end result is obvious: fewer royalties paid to rising and impartial creators, and extra concentrated management over who makes cash from streaming.
Playlists, Penalties, and Platform Energy
Right here’s the twist: simply because a monitor falls beneath 1,000 streams and now not qualifies for royalties doesn’t imply Spotify stops utilizing it. These sub-threshold tracks don’t vanish—they develop into a part of what we would name Spotify’s “shadow catalog”: music that also populates playlists, fuels the advice algorithm, and retains customers listening, however doesn’t generate payouts.
Each time a consumer performs a low-performing monitor, Spotify collects engagement information. That data feeds into its personalization programs, sharpening the algorithm’s skill to retain customers and enhance time-on-platform. That further engagement helps Spotify serve extra advertisements, practice higher fashions, and hold listener churn down. It additionally enriches Spotify’s promoting and information ecosystem, particularly on the free tier the place listening time straight interprets to advert income.
In different phrases, these unpaid tracks are nonetheless a part of the machine. Spotify makes use of them to optimize engagement and promoting—however with out paying the creators a cent. It’s revenue with out payout. Worth extraction with out compensation. And within the lengthy tail of the music economic system, that provides as much as tens of millions of tracks silently pulling their weight without cost.
So plainly that is the quid for the professional quo.
A Cautionary Story for Songwriters
The 1,000-stream threshold is a cautionary story for songwriters as they method Phonorecords V. What started as a “fraud prevention” device is now a benchmark for excluding smaller rights holders from royalties altogether. Streaming providers will level to those thresholds as precedent—arguing that if labels can settle for payout limits, publishers ought to too. With out sturdy opposition, platforms may push for mechanical royalty thresholds that mirror streamshare guidelines, reducing off compensation to low-earning songs. This isn’t nearly recorded music anymore. It’s a warning: as soon as a gate is constructed, it may be copied—and used to lock out songwriters subsequent.
A Royalty System That Punishes the Unsuitable Individuals
Spotify’s royalty threshold is spun as a method to battle fraud and reward “working artists,” you already know, sort of like don’t be evil. However in actuality, it codifies a system the place solely the most well-liked tracks receives a commission—no matter how a lot they contribute to the general worth of the platform.
And when different streaming providers observe the identical path, it stops wanting like enterprise as ordinary and begins to resemble a coordinated effort to slim the market and marginalize everybody however the top-tier gamers.
This isn’t a royalty system constructed on equity or transparency. It’s a redistribution scheme—to not assist extra artists earn a residing, however to serve larger slices to fewer folks.
And that ought to increase alarms far past the music business. you, Gail Slater.
