Spotify’s 1,000-stream threshold cost indie artists nearly $50 million in 2024
A new report reveals how Spotify’s royalty policy has impacted independent musicians since its introduction at the end of 2023.
A costly change for indie artists
Over a year has passed since Spotify implemented its controversial policy requiring tracks to surpass 1,000 streams before earning recording royalties. Now, with a full year of data to analyze thanks to Luminate’s 2024 end of year report, industry execs have crunched the numbers- revealing the cost to independent artists.
Drawing from Luminate’s report, Disc Makers CEO Tony van Veen estimates that the shift cost indie musicians $46.9 million in lost royalties last year. This massive figure sheds light on the consequence of changing streaming initiates that are affecting emerging talent.
How the estimate was calculated
With over 202 million tracks on Spotify, an estimated 87% of all tracks fall short of the 1,000- stream mark. Using conservative estimates within each range (e.g., 11-100 streams), and applying an average rate of $0.0033 per stream, he calculated the lost earnings across all tracks under the threshold. You can see the full details from the table below.
It is important to note that there are many variables when considering royalty payments and they do not operate on a consistent “pay per stream” basis. Factors influencing payouts include:
- Whether the listener is a paying subscriber.
- Geographical region of the listener.
- Total streams on the platform per month.
- Record label agreements with streaming platforms.
Although Spotify doesn’t operate on a flat pay per stream model, this average provides a reasonable benchmark. As these estimates are intentionally conservative, this suggests the actual revenue loss could be even higher.
The dangers for indie artists
We have already covered how new streaming policies, dubbed “Streaming 2.0”, pose significant challenges for smaller artists. Spotify’s threshold policy, along with similar moves from Deezer and Amazon Music, signals a trend that continues to marginalize independent artists.
Critics argue this is a slap in the face for emerging artists. With major labels already holding favorable agreements with DSPs and AI-generated music flooding streaming platforms, it’s harder than ever for indie artists to compete for both attention and income.
Spotify’s justification (and the pushback)
Spotify has defended the policy by pointing out that 99.5% of all streams come from tracks with over 1,000 streams. Therefore, the platform claims that the tracks below the threshold represent an estimated 0.5% of streams, and subsequently 0.5% of the royalty pool- a material amount given Spotify’s $10 billion of royalties paid out in 2024 alone.
Moreover, Spotify argues that processing and transaction fees often make micropayments impractical for artists. According to the company, directing royalties towards artists who depend on them is more meaningful than sharing tiny payments to artists that don’t typically receive them anyway.
Tony van Veen, however, disagrees. He notes that artists typically allow royalties from multiple tracks to accumulate before withdrawing, and argues that processing fees to justify non-payment is disingenuous.
Summing up
Once again, this news sparks debates around the challenges for indie artists in the streaming era, particularly as the industry pushes towards “Streaming 2.0”. With nearly $50 million in royalties lost in 2024 alone, independent artists are once again bearing the brunt of the streaming industry shifts.
The takeaway? Independent artists must diversify their income sources beyond just music royalties. From merch and physical sales to live performances, finding alternative revenue streams is more crucial than ever.
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