Spotify have announced changes to royalty distribution, including a 1,000 streams threshold but that won’t apply to publishing royalties.

This week, Spotify confirmed certain changes to their royalty payouts. Amongst the changes they will be introducing is a new streaming threshold. Tracks will need to reach 1,000 streams before they generate recorded royalties.

“Recorded royalties” is an important phrase here. This reveals that the threshold will apply to sound recording royalties. These apply to that specific recording of a track, and are paid out to the artist and contributors who played and recorded it.

However, under US Copyright Law they are obliged to pay out for publishing royalties. Mechanical royalties are a publishing royalty generated on music streaming services, paid out for the reproduction of a composition. Find out more about publishing royalties here.

Spotify define the publishing royalties that they pay out as follows:

The money owed to songwriter(s) or owner(s) of a composition. These payments are issued to publishers, collecting societies, and mechanical agencies based on the territory of usage.

Spotify confirm that there will be no changes to how publishing royalties are calculated. They write that “this eligibility calculation only applies to recording royalties”, though adding “for now”.

The new policy will go into effect in early 2024. Their goal is to redistribute minor royalties generated by tens of millions of tracks. Tracks generating less than 1,000 streams earn an average of $0.03 a month. These royalties often aren’t paid to the artists due to distributor thresholds and bank charges.

Spotify expect to free up $40 million a year that can be paid to artists above the threshold. Overall, Spotify are expecting to pay out an extra $1 billion to eligible artists over the next 5 years thanks to the changes that they are introducing.

Alongside a recording royalty threshold, Spotify are introducing fiercer repercussions for fraud streaming. They will start charging labels and distributors per track for “flagrant artificial streaming”. They are also redefining royalties for non-musical noise tracks. Noise tracks like whale and nature sounds, will need to be streamed for 2 minutes for a royalty-eligible stream rather than the 30-seconds applied to all tracks currently.

Read about all of the changes to royalty payouts that Spotify are introducing in the article below.