The heated debate over the controversial Spotify stream minimum is showing few signs of resolving. Photo Credit: Shutter Speed
As many know, that much-criticized model went into effect at the behest of the majors last year. Now, audio uploads must rack up 1,000 annual streams on Spotify in order to accrue recording royalties.
Long story short, the vast majority of uploaded tracks aren’t generating any royalties at all under the system. Far from having a negative effect on the majors’ catalogs, the revamped payout approach is in practice redistributing compensation that would have otherwise reached indie and unsigned professionals.
Meanwhile, the minimum-stream wheels (and different measures designed to boost the majors at the expense of indies) are reportedly in motion at other services yet.
Against this backdrop, Disc Makers CEO Tony van Veen calculated the ballpark royalties impact of Spotify’s 1,000-stream minimum during 2024. Last year, the exec estimated, emerging talent missed out on about $47 million in would-be recording royalties.
(Though sizable, the sum resulted from a conservative approach to calculating, van Veen explained. Thus, the actual figure might be even larger.)
On cue, Spotify fired back – including by arguing in more words that the affected tracks receive a small amount of fan interest and (owing mainly to withdrawal minimums) wouldn’t see their recording royalties reach artists in any event.
(In December 2023, DMN Pro broke down the hard numbers behind Spotify’s stream threshold. As part of the same analysis, guest author Jeff Price refuted the idea that the reallocated royalties, owing to distributors’ minimum payments, simply wouldn’t have made it to their intended recipients.)
After indicating that indie distributors also find the system unfair but are “afraid to speak up” owing to their reliance on Spotify, van Veen criticized the stream-volume descriptions as “immaterial” to the minimum-payments conversation.
Running with the point, van Veen called out Spotify’s “spun” contention that 99.5% of streams hit works with at least 1,000 annual plays apiece. The remaining 0.5% of streams aren’t necessarily massive from a volume perspective, but they pertain to a substantial number of tracks.
“Because, dear artist, it is those $47 million in royalties that used to monetize for you, which are now redirected to more popular artists who don’t need your royalties! They have enough fans of their own! They make enough of their own royalties!” van Veen retorted in a video.
“Again, spinning data to make it sound convincing doesn’t make it right. In fact, Spotify’s own data shows that of the 202 million tracks on the platform, over 175 million are now demonetized because they don’t reach the 1,000-stream annual threshold. Somehow 175 million feels like a lot more than ‘tens of millions.’
“And at just two cents per track per month, that still represents (in Spotify’s own calculation) over three and a half million [dollars] in royalties from small emerging artists that they are diverting to the big guys,” the exec proceeded.
“And this blatant lie about distributors’ minimum payments making it impractical to pay royalties to small artists – come on, man! You know that’s just not true. How can I be so sure?
“Because I was CEO of CD Baby’s parent company [AVL Digital] from 2008 to 2019. Those small monthly artist royalty payments just keep gradually growing in each artist’s account until they amount to 50, 100, 300 dollars. And then the artists withdraw them. Implying that an artist wants to withdraw $2 and needs to pay a fee of a dollar for that is just disingenuous.”
Furthermore, far from making those “micro-payments” to each artist, Spotify was simply forwarding slightly reduced royalties to the likes of CD Baby, TuneCore, and DistroKid, van Veen drove home.
Here’s the full 10-minute video response from van Veen, who also addressed Universal Music’s role in spurring the overarching “artist-centric” recalibration, the fact that Spotify must track and pay compositional royalties on all streams in any event, and more.
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Spotify 1,000-Stream Minimum Debate Continues As Distribution Exec Claps Back Against the ‘Patently Unfair Practice’ – Digital Music News
