Spotify changes its licensing structure to fight fraud and eliminate micropayments – Metatrone

Spotify’s changes will definitely cause some excitement

Why is that important: Spotify is reportedly preparing to change its licensing model to prevent streaming fraud. Sources told Music Business Worldwide that the Swedish streaming giant will implement three major changes starting in the first quarter of 2024, including introducing a minimum number of streams before a track can generate views. Royalties.

Insiders didn’t say exactly how many plays a track would need to generate revenue for the rights holder, but said it aimed to demonetize songs that currently bring in less than five cents a month in royalties.

MBW estimates that a song would need to be played 17 times per month, or about 200 times per year, to generate $0.05 per month.

“Spotify says titles that (currently) make up 99.5% of ‘Streamshare’ will continue to be monetized following these changes,” a well-informed source told the publication.

Demonetizing titles that are extremely unpopular and generate little revenue – a few cents here and there – may not seem like a big deal, but overall it adds up to a significant amount of money. According to one source, Spotify estimates the change could bring in around $40 million next year – money that would go back into Spotify’s Streamshare pot and be divided among the most popular tracks.

This will certainly be disheartening for independent artists affected by the change, and we’ll just have to wait and see how this all plays out and if there’s any significant resistance.

Spotify also reportedly intends to financially penalize distributors – including labels – if it detects fraudulent activity related to music on its platform. Such tactics could include the use of AI tools or human “flow farms” to increase the number of flows and would hopefully deter traders from continuing to work with bad actors.

Of course, nothing is ever that cut and dry. What would happen in the event of sabotage – i.e. deliberate interference by a rival label to ban a particular song, for example?

Sources say the streaming giant also has a plan to target non-musical “noise” tracks, which have essentially targeted the system through short tracks that are just enough to trigger a royalty. Currently, a fee is charged for any song played for longer than 30 seconds.

1698371063 75 Spotify changes its licensing structure to fight fraud and eliminate

White noise tracks are becoming increasingly popular on Spotify. For example, a user could create a white noise playlist to help them sleep, consisting of a single 31-second looping track. Each piece triggers a royalty for the creator, as would be the case with any “legitimate” song. Actually a clever loophole.

Spotify wants to extend the amount of time non-music content must be played before triggering a payment. It is not clear what the expanded time unit would be, but for the sake of argument let’s assume it would increase from 30 seconds to four minutes.

Under the new guidelines, white noise tracks that are 31 seconds long would have to be removed from Spotify, recreated to be at least four minutes long, and re-uploaded in order to continue to be monetized. License fees would also drop significantly, as a title would only generate a payment every four minutes instead of every 30 seconds.

Photo credits: Felipe, Chris Briggs, Nivenne Lanos