Spotify's new rules

And how it will change your payouts

Welcome, artists & builders.

Each week, we navigate music’s future together. As some major news dropped on changes coming to Spotify’s payout system, I’m changing the format & focusing there today.

Inside Issue #22

  • Spotify’s new payout rules

  • Before & after Spotify royalty calculator

Spotify’s new payout model

Spotify launched in 2008 and - with it - the streaming royalty system we’ve had ever since.

Image: Ampled, with my edits

→ Everything goes in one big pot.
→ Divide it up based on your share of streams.

15 years later, it’s outdated & broken.

(Hell, it’s even laundered.)

But, changes are coming.

In Q1 2024, Spotify will install the 1st updates to streaming royalties in since inception.

Let’s get into it:

3 major changes to Spotify's payout system:

1. Minimum Annual Stream Threshold

Any song that doesn't hit it receives $0.

→ Expected to de-monetize 0.5% of songs
→ Targeting tracks that earn <$0.05/mo
→ Exact number TBA, but likely ~200

Each track is tiny, but with 120k dropped per day it's projected to total $40M next year.

2. Fraud Penalties for Distributors

Not just a takedown, a crackdown.

→ Song is shown to be associated with fraud
→ Track gets taken down
→ Distro & label get hit with fees

😬 The self-service distro model for $10/year might have a problem. These platforms are inherently relationship-less with artists. How do you know to trust random uploaders?

3. Higher Playtime Requirement for Non-Artist Noise Tracks

Before→ Every song needs :30 to receive royalties.
Soon → Noise tracks require longer play times.

Maybe as long as 4 mins.

These songs can still get paid, but can less effectively game the system by cramming 10 hours of 31 second rain sounds for sleeping onto a single playlist.

Note: this is only for noise tracks NOT associated with true artist profiles.

Why is Spotify making these changes?

100 million tracks
120k added per day
30 seconds to earn a royalty

Up to 10% of streams are frauds

AI only makes this harder.

The system is outdated & has been gamed - real artists pay the price.

How will this change your payouts?

Here’s my back of the napkin, based on available info.

I put together a calculator for anyone to use.

Keep in mind all numbers are not official & subject to change.

  • If your song gets above ~200 streams per year, it will likely earn ~7% more than it would have otherwise.

  • If your song gets under ~200 streams per year, it will earn $0 instead of up to $0.60.

*You can see how I came up with these numbers at the calculator.

Premium vs. User-Generated-Music

We’re on pace for 40 million tracks uploaded to Spotify this year.

What happens when 1 billion people are creating AI-assisted songs inside a half dozen apps & hitting the “send to Spotify” button?

Death by a billion user-generated cuts.

Democratization at that level has the potential to turn every artist into a hobbyist.


This next level of participation - where the lines between creator & consumer get very blurry - can create a much more active experience, grow the pot and benefit working artists.

It’s probably a system that looks nothing like this.

User-generated music is going to explode.

If it doesn’t have a home at Spotify…

It will somewhere.


PS: This week’s newsletter was supposed to be ‘10 Bold Predictions for the next 5 Years of Music’, until this news dropped. Included were the number of songs being released, resulting in streamers/majors squashing it & more tightly controlling free-for-all distributors. I guess it wasn’t so bold.

PPS: Predictions coming next week.

Thanks for reading.

Back to my normal style next week. See you on Twitter or LinkedIn.

- Rob