Tech has waded into another feud with artists. After a week of wrangles about AI mimicry of pop stars and training models on copyrighted content, Spotify has sparked fresh controversy over a new royalty scheme.
The streaming giant announced on Tuesday that its new payment policy will exclude songs with fewer than 1,000 annual streams. According to Spotify, more than 60% of the platform’s catalogue doesn’t reach this threshold. However, they account for under 1% of the streams.
Spotify said it would not make any extra money under the model. Instead, the company has pledged to redistribute the payments to all eligible tracks.
Damon Krukowski of the dream-pop duo Damon and Naomi, compared the model to a “regressive tax.” In a blogpost, he claimed the plans would cut payments to artists who already receive less, in order to boost payments for those who already receive more.
“This will move an estimated $40-$46 million annually from artists like Damon & Naomi to artists like Ed Sheeran,” Krukowski added on X. “Spotify will tell you it’s not about artists you know. Why would you believe them?”
One critic has argued that the move could even face a legal challenge.
Amelia Fletcher, a competition law expert and independent musician, described the model as “discriminatory and exploitative.” In an open letter sent to Spotify CEO Daniel Ek before the plans were confirmed, she warned that the move would create an unlevel playing field.
“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 said.
I have sent a personal letter to Spotify, regarding its proposed ‘demonetisation’ of those tracks which currently account for the lowest 0.5% of royalty payments. pic.twitter.com/JKiGGKB1Tt
— Amelia Fletcher (@ameliafletecon) November 3, 2023
Spotify, however, argues that independent artists will benefit from the changes. The streaming giant said tracks with under 1,000 annual streams generate $0.03 per month on average.
The company added that many creators don’t even get this payment. Because of fees, withdrawal requirements, and simply forgetting about the payments, the money often doesn’t reach the uploaders. Yet they reach an annual total of about $40mn per year, which could be redistributed into the stream-share pool.
Some independent artists and companies have welcomed the move to expand these payments. They have also praised the potential to fight the fraudulent streaming tactic of uploading an extremely high volume of songs.
They should soon see how it works out in reality. Spotify plans to roll out the new model early next year.