Spotify’s zero-royalty plan tells musicians their work is worthless

We’ve all heard the one about audio streaming platforms paying music artists tiny fractions of a cent for each play of their tracks, but this glum ballad is now being remixed into something even more downbeat. The hot new industry trend is not paying next to nothing. It’s paying nothing at all.

Spotify, the world’s largest music streaming service, is poised to adjust its royalty model in the quarter of 2024 so that a new minimum annual threshold for streams will apply before a track becomes eligible for royalties. That’s according to Music Business Worldwide, a news and analysis website that is regularly incisive on this subject and broke news of the change last month.

Over the weekend, citing sources close to the negotiations between Swedish-founded Spotify and music rightsholders, MBW reported the proposed number for the minimum annual threshold: 1,000 plays.

The demonetisation strategy will effectively shift about $40 million (€37 million) in sums that would have been paid to tracks with fewer than 1,000 streams – which is the majority of tracks on the platform – to those with more than 1,000 streams, reallocating the sums paid from 0.5 per cent of the artists on Spotify to the other 99.5 per cent.

The official logic of the move is to rid the system of loose change “micro-payments” that cost money to process and often don’t even reach the artist. The new model could also, in theory, make it harder to commit streaming fraud, whereby AI tools or “stream farms” generate tracks and then play them on a loop to collect royalty payments.

Not endearing himself to everyone with his choice of words, Universal Music Group chief executive Lucian Grainge has been complaining about “merchants of garbage” flooding platforms with content that “has absolutely no engagement with fans” and contrasting the output of professional artists with system-gaming “vacuum cleaner sounds or rain on a pane of glass”.

Streaming fraud is both a niche technology problem and a shady phenomenon with real-world consequences: Swedish newspaper Svenska Dagbladet reported in September that criminal networks behind a rise in bombings and shootings in Sweden were using fake Spotify streams to launder money. That’s sort of mind-blowing.

Still, and perhaps this should go without saying, the least popular tracks on Spotify are not all cynical AI creations auto-played for 31 seconds (one second longer than the 30-second point at which monetisation kicks in). Nor are they typically the work of people with links to Swedish criminal gangs.

Indeed, Spotify users who possess even slightly niche or eclectic tastes, a modicum of curiosity about new music and/or a memory of past obscure gems will regularly stumble across the “<1,000″ tag next to tracks by real human artists who either aspire to have a viable career from music or once did so.

Who cries for the 0.5 per cent? Not the major record labels, obviously, but plenty of people. Artists, anyone who cares about artists, anyone who understands how talent develops over time and anyone who would prefer their cultural landscape to have a thriving underground scene to complement the mainstream should be alarmed by the concept and what it might herald in the future.

“Ah good, the money sacks were getting very heavy,” the Irish indie band Pillow Queens drolly posted on X when Spotify’s plan was originally mooted (before the threshold was specified by MBW).

The Screen Composers Guild of Ireland posted that the plan would affect self-releasing composers and that having such a powerful distributor in the supply chain of any industry “often leads to unfair practices, which ultimately effect the customer/audience and their choice”.

Meanwhile, competition policy expert Amelia Fletcher, a non-executive director of the UK competition watchdog, has written a letter to Spotify chief executive Daniel Ek in a personal capacity asking him to reconsider.

The proposal, Fletcher says, is at odds with Spotify’s “worthy corporate statements” about existing “to connect creators with fans and empower creators to live off their art” and being a champion of fair competition.

“Not only is it intrinsically unfair, but it is also anti-competitive and seriously risks constituting an abuse of dominance under UK and EU competition law,” she writes.

Music fans of a certain disposition will recognise the name. Fletcher has been the frontwoman of multiple English indie-pop bands – including Talulah Gosh, Heavenly and Tender Trap – since the 1980s. The 1998 song Queen B by another of her bands, Marine Research, is on my Spotify all-time favourites playlist.

Her letter to Spotify was duly written in the dual capacity of someone who has been involved in the development of digital platform regulation in the UK and EU and also “a long-time creator and champion of independent and DIY music and co-founder of a small indie label”.

Mega-powerful cultural gatekeepers interested only in extracting the maximum amount of profit from a small handful of artists – and happy to stifle the rest – pre-date Spotify.

And yet the economics of the industry have never seemed as stacked against the DIY ethos and as over-reliant on an elite at the top as they do now. It’s tough to imagine the long tail of bands that found a fanbase outside the mainstream in the 1980s and 1990s doing so now – or doing so then had Spotify been around.

Demonetising smaller grass-roots artists is “clearly discriminatory”, Fletcher writes, while Universal’s support for the scheme on the basis that it will “reward real artists with real fanbases for the platform engagement they drive” is “borderline offensive”.

It is hard to argue with any of this. Among what is sometimes referred to as music’s “middle class” – artists with the kind of profile and listenership that would previously been enough to sustain a living from – the suspicion must be that this is the dispiriting sound of a precedent being set and that, instead of benefiting from the adjusted model, they will become vulnerable to the next tilt of the unlevel playing field, the next “reallocation” of $40 million.

The clue is in the name: it’s a royalty model, yes, but it’s not for the peasants. Stick that on your Spotify Unwrapped.