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Spotify‘s Artist Wrapped is back for a seventh year — and in 2023, the platform is offering even more ways for artists to engage with their top fans.
Available this year in 37 languages, the Artist Wrapped experience will be available to all artists on Spotify who have at least three listeners; to find it, artists can either log in or sign up for Spotify for Artists and click the “Your 2023 Artist Wrapped” card.
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Once again, artists were given the opportunity to record personalized video messages for their top fans on the platform. Among the artists to take part this year were superstars including Taylor Swift, Bad Bunny, Peso Pluma, NewJeans, SZA, KAROL G and Jung Kook. Those messages will show up in top fans’ Wrapped data stories, in the Wrapped feed on the Spotify homescreen and elsewhere.
Additionally this year, artists in the United States and Canada were given the opportunity to reward their top fans in those markets with discounts on select merch items, which will be promoted through the Wrapped experience on Spotify, via email and more. Fans across the globe will also receive concert recommendations from their top artists in the Wrapped feed, the Live Events feed and other off-platform promotion.
One new feature in 2023 is Wrapped listening parties, described as digital live audio experiences that will allow artists to speak directly to their fans and thank them for their support, stream their top tracks of 2023, answer fan questions, sell merch and more. These listening parties will be available to top fans of a select group of artists, including Ava Max, JVKE, Chelsea Culter and Lauren Daigle.
Also available to artists this year is a series of data stories with the following stats: the number of listeners who heard an artist for the first time in 2023, the top three places where touring artists saw the highest ticket sales and the average time spent listening by each of an artist’s top 0.001% of fans. Artists will additionally receive a summary share card highlighting fan engagement, including the number of new listeners, saves and playlists as well as the number of fans who had them as a top artist.
Last but not least, Spotify brought back Songwriter Wrapped for a second straight year. Once again, songwriters and producers with an active songwriter page and “Written By” playlist on the platform will receive an exclusive Songwriter Wrapped experience and share card recapping how the songs they wrote performed on Spotify in 2023. This year, songwriters can also fill out customizable social share forms that will allow them to call out their fellow creators and favorite songwriting or production moments with categories like “My Favorite Songwriter of 2023,” “My Pick for Best Lyrics of 2023,” “My Favorite Producer of 2023,” “My Pick for Best Beat of 2023,” “My Favorite Mixing Engineer of 2023” and “Thank you to my 2023 collaborators.” All are accessible on Spotify’s @SpotifySongwriter Instagram page and here.
For full details, check out Spotify’s full Artist Wrapped and Songwriter Wrapped blog post here.
Are you ready for it? Spotify unveiled its 2023 Wrapped campaign on Wednesday (Nov. 29) and revealed the most streamed artists, songs, albums and podcasts of the year. Taylor Swift, who’s already had a banner year with her massive Eras Tour and the release of two re-recordings, reigned as the streaming platform’s overall top artist, […]
While Google usually takes a 15% cut of customer payments for app subscriptions in its Play Store on Android devices, Spotify obtained a deal that allowed it to pay a drastically reduced commission, according to The Verge.
The details of the business arrangement were divulged by Google head of global partnerships Don Harrison on Monday (Nov. 20) in testimony during the Epic Games vs. Google trial: Spotify paid no commission if users bought subscriptions through Spotify, and 4% if users selected Google as their payment processor.
Harrison said in court that Spotify landed this “bespoke” agreement because “if we don’t have Spotify working properly across Play services and core services, people will not buy Android phones.” His testimony also indicated that the deal entailed a $50 million investment by both Google and Spotify in a “success fund.”
In a statement to The Verge, a Google spokesperson said that “a small number of developers that invest more directly in Android and Play may have different service fees as part of a broader partnership that includes substantial financial investments and product integrations across different form factors. These key investment partnerships allow us to bring more users to Android and Play by continuously improving the experience for all users and create new opportunities for all developers.”
A rep for Spotify did not respond to Billboard’s request for comment.
Epic Games, which is known for furnishing the world with the popular game Fortnite, has been battling Google since way back in 2020 over the 30% fee the search giant charges app developers for purchases made on its Play Store on Android devices. Epic tried to circumvent Google’s system by putting its own payment system into the Fortnite app and charging a reduced price; Google hit back by yanking Fortnite off the Play Store.
Epic then sued Google. “Google… is using its size to do evil upon competitors, innovators, customers and users in a slew of markets it has grown to monopolize,” Epic wrote in its complaint. The New York Times reported that Epic’s CEO, Tim Sweeney, said in court on Monday (Nov. 20) that Google “exercises de facto control over the availability of apps on Android.”
Wilson White, a Google vp of public policy, told reporters earlier this month that “Epic wants all the benefits of Android and Google Play without having to pay for them,” according to The New York Times. “The lawsuit [from Epic] would upend a business model that has lowered prices and increased choices,” White argued.
Google had tried to avoid revealing the nature of its relationship with Spotify in court, The Verge reported earlier this month. “Disclosure of the Spotify deal would be very, very detrimental for the negotiation we’d be having with… other parties,” Google attorney Glenn Pomerantz told the judge overseeing the case.
Spotify’s new royalties model will be a subject of discussion when IMPALA’s board meets later this month.
In a brief statement, the Brussels-based independent music companies association announced it was canvassing its member views on the proposed changes, detailed for the first time in a blog post published on Tuesday (Nov. 21).
“Our focus is and will remain ensuring a fair, diverse and sustainable music ecosystem for all,” reads the trade body’s message, “as set out in our 10-point plan to make the most of streaming, which was released two years and a half ago and was updated earlier this year.”
The board of IMPALA is scheduled to meet next Thursday, Nov. 30.
With its post, Spotify confirmed the broader music industry’s worst-kept secret by sharing details of a three-pronged royalties model, which would funnel more money to popular artists, labels and distributors, lift the streaming threshold, while putting the clamps on streaming fraud.
Among the changes touted by Spotify: tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties; labels and distributors will fined per track when “flagrant artificial streaming is detected” on their content; and functional content — think rain noises, whale sounds, recordings of wind rustling the leaves— will be significantly devalued, and its minimum track length increased to two minute into order to be eligible to generate royalties.
By tackling these issues that account for just a “small percentage of total streams,” Spotify reckons, its new policing of content “now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years.”
IMPALA’s voice has been front and center in the debate for a “fairer, more dynamic” streaming market.
In April, IMPALA published an updated version of its 10-step plan to “make the most of streaming,” which proposed various changes to how digital royalties are allocated, including attaching a premium value to tracks that the listener has sought out, a so-called “Fan Participation Model” whereby artists and rights holders could generate incremental revenue within digital services through offering special features and extra tracks, higher share for master rights and more.
Later, in September, IMPALA raised concerns over the new “artist-centric” streaming model being rolled out by Deezer and Universal Music Group (UMG), warning of a potential “two-tier” music market that unfairly disadvantages indie artists and labels.
The European trade body represents nearly 6,000 independent companies, labels and national associations, including Beggars Group, Cooking Vinyl, Epitaph and PIAS Music Group.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: Sean “Diddy” Combs is accused of rape amid an ongoing wave of music industry sexual abuse lawsuits; Shakira settles her $15 million tax evasion case on the eve of trial; UMG defeats a lawsuit filed by artists over its lucrative ownership stake in Spotify; and more.
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THE BIG STORY: Diddy Sued As Music #MeToo Wave Continues
Following a string of abuse cases against powerful men in the music industry, Sean “Diddy” Combs was sued by R&B singer and longtime romantic partner Cassie over allegations of assault and rape — and then settled the case just a day later.
In a graphic complaint, attorneys for Cassie (full name Casandra Ventura) claimed she “endured over a decade of his violent behavior and disturbed demands,” including repeated physical beatings and forcing her to “engage in sex acts with male sex workers” while he masturbated. Near the end of their relationship, Ventura claimed that Combs “forced her into her home and raped her while she repeatedly said ‘no’ and tried to push him away.”
Combs immediately denied the allegations as “offensive and outrageous.” He claimed Cassie had spent months demanding $30 million to prevent her from writing a tell-all book, a request he had “unequivocally rejected as blatant blackmail.”
Read the full story on the lawsuit here.
Just a day after it was filed, Combs and Ventura announced that they had reached a settlement to resolve the case. Though quick settlements can happen in any type of lawsuit, it’s pretty unusual to see a case with such extensive and explosive allegations end just 24 hours after it was filed in court. “I wish Cassie and her family all the best,” Combs said in a statement. “Love.”
Both sides quickly put their spin on the settlement. A former staffer at Cassie’s law firm sent out a statement arguing that the quick resolution was “practically unheard of” and suggesting it showed the “evidence against Mr. Combs was overwhelming.” Combs’ lawyer, Ben Brafman, put out his own statement reiterating that a settlement — “especially in 2023” — was “in no way an admission of wrongdoing.”
Read the full story on the settlement here.
The case against Combs is the most explosive sign yet that, six years after the start of the #MeToo movement, the music industry is currently experiencing something of a second iteration.
Sexual assault lawsuits were filed earlier this month against both former Recording Academy president/CEO Neil Portnow and label exec Antonio “L.A.” Reid, and in October longtime publishing exec Kenny MacPherson was sued for sexual harassment. Before that, sexual misconduct allegations were leveled at late Atlantic Records co-founder Ahmet Ertegun; Backstreet Boys member Nick Carter; singer Jason Derulo; and ex-Kobalt exec Sam Taylor.
Many of the recent cases have been filed under New York’s Adult Survivors Act, a statute that created a limited window for alleged survivors to take legal action over years-old accusations that would typically be barred under the statute of limitations. With that look-back period set to end on Thursday (Nov. 23), more cases could be coming in the next few days. Stay tuned…
Other top stories this week…
UMG WINS CASE OVER SPOTIFY STAKE – A federal judge dismissed a class action against Universal Music Group that challenged the fairness of its 2008 purchase of shares in Spotify. The case, filed by ’90s hip-hop duo Black Sheep, accused the company of taking lower-than-market royalty rates in return for a chunk of equity that’s now worth hundreds of millions. But the judge ruled that such a maneuver — even if proven true — wouldn’t have violated UMG’s contract with its artists.
A$AP ROCKY TO STAND TRIAL – A Los Angeles judge ruled that there was enough evidence for A$AP Rocky to stand trial on felony charges that he fired a gun at a former friend and collaborator outside a Hollywood hotel in 2021. The 35-year-old hip-hop star’s lawyer vowed that “Rocky is going to be vindicated when all this is said and done, without question.”
SHAKIRA SETTLES TAX CASE – The Columbian superstar agreed to a deal with Spanish authorities to settle her $15 million criminal tax fraud case that could have resulted in a significant prison sentence for the singer. After maintaining her innocence for five years, Shakira settled on the first day of a closely-watched trial: “I need to move past the stress and emotional toll of the last several years and focus on the things I love,” she said.
ROD WAVE MERCH CRACKDOWN – The rapper won a federal court order empowering law enforcement to seize bootleg merchandise sold outside his Charlotte, N.C., concert, regardless of who was selling it. He’s the latest artist to file such a case to protect ever-more-valuable merch revenue following Metallica, SZA, Post Malone and many others.
MF DOOM NOTEBOOK BATTLE – Attorneys for Eothen “Egon” Alapatt fired back at a lawsuit that claims he stole dozens of private notebooks belonging to the late hip-hop legend MF Doom, calling the case “baseless and libelous” and telling his side of the disputed story.
“THE DAMAGE WILL BE DONE” – Universal Music Group asked for a preliminary injunction that would immediately block artificial intelligence company Anthropic PBC from using copyrighted music to train future AI models while their high-profile case plays out in court.
DIDDY TEQUILA CASE – In a separate legal battle involving Diddy, a New York appeals court hit pause on his lawsuit against alcohol giant Diageo that accused the company of racism and failing to adequately support his DeLeon brand of tequila. The court stayed the case while Diageo appeals a key ruling about how the dispute should proceed.
Universal Music Group (UMG) has won the dismissal of a closely-watched class action that challenged the fairness of its 2008 purchase of shares in Spotify — a case that accused the company of taking lower-than-market royalty rates in return for a chunk of equity that’s now worth hundreds of millions.
The lawsuit, filed last year by the members of the ’90s hip-hop duo Black Sheep, claimed that UMG had secured its now-lucrative stake in the then-nascent streamer by signing an “undisclosed, sweetheart deal” that left artists underpaid to the tune of $750 million. UMG has called the claims “patently false.”
In a decision Monday (Nov. 20), U.S. District Judge Jennifer L. Rochon ruled that even if UMG had taken below-market royalty rates from Spotify in return for equity, doing so would not have breached its contracts with artists — which give the music giant “unfettered discretion” to license its recordings as it sees fit.
“Plaintiffs argue that UMG exceeded the bounds of its discretion under the contract by making an undisclosed licensing deal in exchange for Spotify stock, for which UMG is withholding artists’ rightful share … of the proceeds UMG reaped,” the judge wrote. “But they do not square that conclusion with UMG’s unlimited right to license their work.”
Black Sheep members Andres “Dres” Titus and William “Mista Lawnge” McLean sued in January, claiming Universal acted in “bad faith” when it secretly acquired a 5% stake in the “fledgling streaming service” in 2008 for just a few thousand dollars. The real payment to Spotify, the lawsuit claimed, had been UMG’s willingness to accept “substantially lower royalty payments” — an arrangement that benefited UMG and Spotify but “shortchanged artists” and “deprived” them of fair royalties.
“Universal concealed from artists that it acquired Spotify stock and that royalty payments were depressed as a result,” lawyers for the duo wrote in their complaint. “Over time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars.”
When the case was filed, Universal called the claims “patently false and absurd.” In later court filings, the company flatly denied the core allegation: “UMG disputes that the equity stock acquired in 2008 was part of the consideration that Spotify provided for a license to UMG’s music catalog.”
Reps for both UMG and Black Sheep did not return requests for comment on Tuesday.
The major music companies all acquired equity in Spotify during the streamer’s early days. According to a 2018 report by Music Business Worldwide, the then-Big Four music companies (Universal, Warner, Sony and EMI) plus Merlin paid just €8,804 total for a combined 18% of the streamer divvied up between them. The role that royalty rates played in that deal, and whether artists would eventually see some of the profit, was hotly debated for years.
After Spotify went public in 2018, it started to become clear just how valuable those stakes had become. Sony Music sold 50% of its shares for $768 million in April 2018, followed by Warner selling its entire stake for $504 million in August 2018. Both later made good on previous pledges to disburse some of the proceeds to artists, although reportedly with differing stipulations.
Universal has yet to sell its shares in Spotify, but it made a similar pledge in March 2018. Later that year, when Taylor Swift signed with the company, she reportedly required that UMG further promise to distribute the money to artists regardless of unrecouped balances — meaning artists will be paid regardless of whether they still owe the label money.
But in their lawsuit, Black Sheep argued that such promises were not good enough. They said Universal had already wronged many of its artists in one of two ways — simply by taking lower rates and thus reducing their royalty payments, or by failing to disburse the profits of their equity stakes as royalties.
In Monday’s ruling dismissing the case, Judge Rochon said she did not even need to decide whether or not those allegations were true. Instead, she simply ruled that even if they were true, Universal would still not have violated its record deal with Black Sheep.
“The contract’s plain language does not support plaintiffs’ theories,” the judge wrote about the allegedly reduced rates, noting that the deal gave UMG the “sole, exclusive and unlimited right” to license the recordings. “Given this wide discretion, there is no basis upon which to find that UMG breached the contract by accepting a lower royalty from Spotify.”
Judge Rochon also rejected the argument that UMG should have accounted for the equity profits when paying artists, saying the contract only requires payment for revenue that is “solely attributable” to their specific songs.
“Plaintiffs cannot directly trace UMG’s alleged acquisition of Spotify stock to the use or exploitation of their work alone,” the judge wrote. “UMG did not breach the contract by failing to account for its value when paying Plaintiffs their royalties.”
Even beyond the merits of the lawsuit, the judge also said she would have dismissed most of it for a far simpler reason: That it had been filed far past the statute of limitations. If the case had moved forward, Rochon said it only would have applied to royalty payments made after January 2021, not those reaching back all the way to 2008.
Over the last several years, artists, record labels and streaming services have been doubling down on one of the longtime staples of the music, and particularly live music, business: merch. And there’s good reason for that: As Spotify’s global head of music, Jeremy Erlich, tells Billboard, the company estimates that the music merch business is worth around $8 billion globally. And with streaming now far and away the dominant form of music consumption, merchandise has increasingly become the go-to way to express fandom at a time when purchasing music has become a decidedly niche activity.
In recent months, Amazon Music has been doubling down on its merch efforts, partnering with the likes of Beyoncé, Mariah Carey, Rauw Alejandro and Doja Cat on exclusive merch related to tours (and, in Carey’s case, the year-end holidays). Over the past month, Spotify has also expanded deeper into the merch business — both with a new, dedicated hub for artist merch, which it announced earlier this year, and a new capsule collection that debuted in the past few weeks featuring exclusive one-off drops by the likes of Peso Pluma, Rosalía, Daft Punk, Tyler, the Creator and Tems.
This marks the latest foray into the merch space for streaming market leader Spotify, which has offered artists various ways to promote their own merchandise on their artist pages for several years via partnerships with Merchbar and Shopify. The capsule collections, which are being white-labeled through a partnership with Sony-owned merch company Ceremony of Roses, represent the latest evolution of the Spotify strategy: Erlich tells Billboard they’re “part of a pyramid of merch offers and services that we can provide for artists and fans,” aligning with the company’s stated goal of helping artists make a living from their work.
“Now that we have the merch hub, there’s a destination for people to go [to], and what we’re testing out now is the ability to create unique pieces for the fans and super fans, which have elements of streetwear culture with drops and limited quantities and more ways for people to feel they’re getting a unique experience and a unique product,” Erlich says. “This is step two of a multi-step journey; it’s a pretty limited drop with only five artists, limited quantities, but it’s also helping us really learn the best ways to partner with artists, but also the best ways to contact our users and help them enjoy this.”
The capsule collection was intentionally limited to five artists, all of whom (with the exception of Pluma) had a pre-existing relationship with Ceremony of Roses. That allowed Spotify to test-drive the new feature in a limited capacity with a collection of artists who have a distinct image and track record in the fashion-merch world. Spotify is also using its Fans First tech to drive the drops, which allows an artist’s biggest fans, in terms of listening engagement, first dibs at the exclusive collections — a tactic the company has employed with ticket offerings and other exclusives in the past. Erlich says the company is trying to establish how to use, but not over-use, the Fans First feature “to find out what works in what ways.”
The collections were jointly designed through a collaborative partnership between the artists, Spotify and Ceremony of Roses, the latter of which handled the logistics of production and shipping. As Ehrlich noted, they’re also tapping into the rarities and exclusives elements of streetwear culture, which he acknowledges is “not necessarily native to what Spotify does normally.” It’s what he sees as part of the learning process as Spotify continues to deepen its forays into the merch space.
“Our plan is to go do this again in Q1 with another set of artists, maybe in a more fashion-facing line, and we’ll have learned a lot by then,” Ehrlich says. “It’ll become our primary method to drop exclusive merch throughout 2024 while we find ways to integrate commerce better in-platform. In 2025, hopefully, you’ll see much more integrated and seamless commerce on-platform around merch. And from the moment that we do that, then we can turbocharge the scale with which we do it.”
For Spotify, the merch space offers an additional revenue stream for both artists and itself, as it builds on the back of its first quarterly profit in over a year in Q3, as price hikes and user growth helped tip it into the black. Adding more integration into its sales offerings — ironic as it is for a company that is so associated with helping the music business move on from a music sales model — is what Erlich sees as the present and future of the hybrid model.
“Whether it’s tickets, concerts, physical goods, fans want to express fandom in different ways and that’s a great thing. And the ability to use our streaming platform and data to identify fandom and be much more targeted in what you’re offering is the competitive advantage that we have given our scale and knowledge,” he says. “So I’m excited for us to do more a la carte, but it’s around this expression of fandom rather than access to music.”
Functional content — think rain noises, whale sounds, recordings of wind rustling the leaves and the like — will be significantly devalued under Spotify‘s new royalty system: Plays of this audio will generate one fifth of the royalties generated by a play of a musical track, according to a source with knowledge of the streaming service’s new policy.
In response to a request for comment, a Spotify spokesperson pointed Billboard to the streaming service’s blog post from Tuesday (Nov. 21). The blog notes that, “over the coming months,” Spotify will “work with licensors to value noise streams at a fraction of the value of music streams.” The blog does not say what the fractional amount will be.
Spotify’s decision to count functional content at 20% of the rate for music tracks is the culmination of nearly a year’s worth of bad press for rain sounds and the like. While this type of audio is often used for the seemingly innocuous purpose of relaxing after a long and stressful day, Spotify wrote on its blog that the space is “sometimes exploited by bad actors who cut their tracks artificially short — with no artistic merit — in order to maximize royalty-bearing streams.”
This initiative, says Spotify’s blog post, is intended to free up “extra money to go back into the royalty pool for honest, hard working artists.”
As a result, some of the most powerful executives in music have launched a sustained assault on rain and its various non-musical cousins over the course of 2023. “It can’t be that an Ed Sheeran stream is worth exactly the same as a stream of rain falling on the roof,” Warner Music Group CEO Robert Kyncl told analysts in May.
Two months later, Universal Music Group CEO Lucian Grainge told analysts that streaming services must ensure that “real artists don’t have their royalties diluted by noise and other content that has no meaningful engagement from music fans.” He later amped up the rhetoric by describing companies that upload this content as “merchants of garbage” that were “flooding the platform with content that has absolutely no engagement with fans, doesn’t help churn, doesn’t merchandise great music and professional artists.”
When UMG rolled out a new royalty system with Deezer in September, the streaming service said it would replace “non-artist noise content” with its own functional music, while also excluding this audio from the royalty pool. “The sound of rain or a washing machine is not as valuable as a song from your favorite artist streamed in HiFi,” Deezer CEO Jeronimo Folgueira said. Deezer said plays of rain, washing machines and other non-music noise content counts for roughly 2% of all streams.
Spotify did not provide a comparable number in its blog post. It is taking one other step to limit the impact of functional content on the royalty pool: To generate royalties, a functional audio track must be longer than two minutes.
“These policies will right-size the revenue opportunity for noise uploaders,” Spotify wrote. “Currently, the opportunity is so large that uploaders flood streaming services with undifferentiated noise recordings, hoping to attract enough search traffic to generate royalties.”
Spotify’s new royalty model should be a money-spinner worth an additional $1 billion for emerging and established artists over the next five years, according to the streaming giant, as content partners line-up to salute the initiative.
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As previously reported, Spotify is updating its royalty system, an overhaul the company anticipates will funnel more money to more popular artists, record labels and distributors, while clamping down on streaming fraud.
In a new blog post, published today (Nov. 21), Spotify reps say its three-pronged policy will apply better hygiene to its platform, better distribute small payments that aren’t reaching creators, and, while tackling these issues that account for just a “small percentage of total streams,” its new policing of content “now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years.”
As previously reported, Spotify’s controversial new royalty model will affect more than two-thirds of its song catalog but that’s due to the magnitude of music that’s uploaded to the platform, where the vast majority of songs don’t get listened to with any frequency. While tens of millions of songs will fall below the 1,000 streams threshold, a source tells Billboard that policy will only shift about 0.5% of Spotify’s royalty pool to more popular tracks. That was equal to about $46 million in royalties in 2022, out of $9.27 billion paid out in total.
The changes, confirmed today in Spotify’s blog, which features breakdowns and why they’ve been actioned, are welcomed by a string of music industry figures.
“Believe welcomes Spotify’s initiative to clean-up the market from artificial streaming and noise, driving more revenues to all legitimate artists,” comments Denis Ladegaillerie, founder & CEO of Believe. “We believe that creating more benefits to develop up-and-coming artists would be a great complement to the institution of a 1.000 stream threshold. We are encouraged by our current dialogue with them on this topic.”
Spotify’s changes are “going to help us deliver on that goal: these new policies acknowledge the simple truth that improving outcomes for artists goes beyond demanding bigger payouts from the DSPs,” adds Kristin Graziani, president of Stem. “All three of Spotify’s new mechanisms redirect funds that currently sit on the balance sheet of distributors or land with bad actors back to the artists we serve.”
Under the new model touted by Spotify:• Tracks that receive less than 1,000 streams within a 12-month period will not qualify for royalties. Those royalties, instead, will be redistributed into the greater royalty pool.• Labels and distributors will be charged 10 euros for any track that is found to have 90% or more of its streams deemed fraudulent.• Non-music noise tracks must now be at least two minutes long in order to qualify for royalties. As well, according to a source, there are conversations about implementing a rate reduction on these tracks that would value their streams below those for music.To date, Spotify boasts more than 574 million users, including 226 million subscribers in more than 180 markets, generating “over $40 billion and counting” in royalties to artists and copyright holders, the Sweden-based business reports.
Adding to the support for Spotify’s new model is Terry McBride, chairman & CEO, Nettwerk Music Group. “Fraud and artificial music are significant problems for streaming services, depriving legitimate artists from building a community of fans and earning a sustainable living,” McBride comments. “I applaud Spotify’s continual and evolving efforts to address these issues.”
Bob Valentine, CEO, Concord, and Andrew Bergman, CEO Downtown Music Holdings, also welcome Spotify’s new policies.
Led by founder and CEO Daniel Ek, Spotify is said to be planning a roll-out its new royalties model in “the new year,” although no firm date has yet been announced. The changes will not affect songwriters for the time being.
Read more here.
In the new year, Spotify plans to roll out a new royalties model that will drive more money to more popular artists, record labels and distributors, while clamping down on streaming fraud.
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The scheme is three-pronged, based on Billboard’s reporting, creating a new streaming threshold that tracks must reach in order to qualify for royalties, penalizing fraudulent activity and setting a minimum play-time length for non-music noise tracks to earn revenue on the platform. The details on each of these elements have trickled out in the press without a formal announcement, but Billboard can now report specifics on each, according to sources in streaming and distribution.
Here’s a full rundown of Spotify’s new royalties model:
Tracks that receive less than 1,000 streams within a 12-month period will not qualify for royalties. Those royalties, instead, will be redistributed into the greater royalty pool.
Labels and distributors will be charged 10 euros for any track that is found to have 90% or more of its streams deemed fraudulent.
Non-music noise tracks must now be at least two minutes long in order to qualify for royalties. As well, according to a source, there are conversations about implementing a rate reduction on these tracks that would value their streams below those for music.
As previously reported, Spotify’s new royalty model will affect more than two-thirds of its song catalog but that’s due to the magnitude of music that’s uploaded to the platform, where the vast majority of songs don’t get listened to with any frequency. While tens of millions of songs will fall below the 1,000 streams threshold, a source tells Billboard that policy will only shift about 0.5% of Spotify’s royalty pool to more popular tracks. That was equal to about $46 million in royalties in 2022, out of $9.27 billion paid out in total.
The changes have been largely applauded by the music industry, although some in the independent distribution sector are concerned that the anti-fraud measures could disproportionately affect DIY distributors, even though major label acts sometimes engage in this activity too. These companies that have built hands-off, high-volume distribution businesses with small margins, charging a small fee per upload have huge batches of new music uploading daily, which means it’s hard to know who is doing the uploading.
DistroKid founder Philip Kaplan voiced his objection to the penalty system on a recent call with the Music Fraud Alliance, according to two sources who were also on the line.
One of those executives described the gist of Kaplan’s comments: “We can’t determine if a new client is going to hire a marketing service that’s going to bot streams until they’ve done it. It’s like you can’t determine if your neighbor is going to commit a crime.”
Spotify is planning to roll out its new royalties model in early 2024, although no firm date has yet been announced. The changes will not affect songwriters for the time being.