Did the Spotify 1000 Stream Rule Cost Indie Artists $47 Million?

The Spotify 1000 stream rule has quietly stripped indie artists of $47 million or extra in royalties, based on Disc Makers CEO Tony van Veen.

Did the Spotify 1000 Stream Rule Cost Indie Artists $47 Million?

by Tony van Veen by way of Disc Makers Blog

Making cash is essential to any artist — however it’s much more essential for impartial artists such as you. Luminate — the corporate previously generally known as Nielsen Soundscan —got here out with their 2024 state of the music trade report, and the outcomes have been compelling.

In this text, we’ll discover the information that’s of explicit curiosity to impartial artists who get their music on Spotify. And, we’ll reply this query: How a lot in royalties earned by impartial artists in 2024 did Spotify NOT pay out to you?

Spotify royalties and the way they work

As you undoubtedly keep in mind, in late 2023, Spotify introduced that it was going to cease paying royalties on all tracks that had lower than 1,000 streams. Now, now we have 2024 streaming information obtainable.

As a musician, numbers will not be essentially the most thrilling factor for you, however comply with alongside, as a result of the outcomes are actually attention-grabbing.

Let’s begin right here: this massive black triangle represents all of the tracks on Spotify – 202,200,000 to be precise.

Now, let’s break down this pyramid into sections representing what number of streams the tracks had. Starting with the tiniest tippy high of the pyramid, nearly invisible – that’s what number of tracks had over 1 billion streams. Turns out, there’s solely 33 tracks with a billion streams or extra, representing .00002% of the entire variety of tracks on Spotify.

Next up, tracks with between 1 million and one billion streams. There are 492,000, or about 0.25% of the entire.

For tracks with 100,000 to one million streams, there are 2.1 million tracks representing roughly 1% of all tracks on Spotify.

And, for the final bucket of tracks that monetize – these with 1,000 to 100,000 streams – there are 24.1 million of these on Spotify, representing near 12% of the entire tracks on the platform.

The remainder of this pyramid – the black gap of streaming tracks, so to talk – represents tracks with underneath 1,000 streams that don’t monetize. If you do the mathematics, that’s 175.5 million tracks, or nearly a whopping 87% of all tracks on Spotify.

Let that sink in for a second. Since Spotify applied their rule that tracks underneath 1000 streams gained’t monetize, they’ve successfully demonetized 87% of ALL the tracks on the platform.

Now, to determine what which means by way of Spotify royalties that you just didn’t receives a commission, let’s dig deeper and have a look at how the non-monetizing tracks break down.

Of the non-monetizing tracks, 34.6 million had between 101 and 999 streams, 47.7 million had between 11 and 100 streams, and a whopping 93.2 million tracks had 0-10 streams.

Now now we have all the information we have to estimate the royalty quantity that ought to have been paid for the streams of those tracks that didn’t monetize.

Spotify streams that didn’t monetize

This grid options the information that was simply talked about. In the primary column, you see the breakdown of the buckets of tracks by variety of streams, with 0-10 stream tracks, 11-100, and 101-999 being the variety of streams for the tracks in every bucket.

Then, you see the entire tracks in every bucket, which we already mentioned – 93 million with 0-10 streams, 47 million with 11-100, and over 34 million with 101-999 streams, for a complete of 175.5 million tracks with between 0 and 999 streams.

Now, let’s make some assumptions about what number of streams each observe in every bucket has on common. We’ll be conservatively reasonable. In the 0-10 stream bucket, let’s assume most of these tracks have zero streams. But there are lots that do have streams, so on common I let’s assume 2 streams per observe for every of those 93.2 million tracks.

For the 11-100 stream tracks, the mathematical median could be 55 streams, however we’ll be conservative and drop that to 40. And we’ll be much more conservative for the bucket that has 101-999 streams, assuming they common out to simply 350 streams per observe.

So now we calculate what number of streams for every of these buckets. It’s basic math: multiply the entire variety of tracks by the common streams per observe. And you see that for the 0-10 bucket there are a bit over 186 million streams, for 11-100 there are 1.9 billion streams, and for the 101-999 bucket there are 12.1 billion streams.

Total them up and also you come to 14.2 billion non-monetized streams. And, as a examine of whether or not our assumptions are conservative sufficient, in the event you divide these 14.2 billion streams by the 175.5 million non-monetizing tracks, you find yourself with a median of simply 81 streams per observe. This feels appropriately conservative.

Alright, now let’s multiply these streams by a median Spotify royalty of .33 cents per stream, and you find yourself with the next royalty numbers that ought to have been paid out:

• 0-10 stream tracks: ~$620,000
• 11-100 stream tracks: ~$6.3 million
• 101-999 stream tracks: ~$40 million.

The grand complete is $46.9 million in royalties.

That’s proper, in 2024 Spotify didn’t pay near $47 million in sound recording royalties to tracks that had underneath 1000 streams — and that doesn’t embody the extra publishing royalties that ought to have gone to songwriters and publishers!

And evidently, most of these royalties would have gone to you, the rising artist.

So, who acquired most of your royalties?

According to Luminate, the highest 10 streaming tracks in 2024 have been by the likes of Benson Boone, Sabrina Carpenter, and Billie Eilish. Each one of many high 10 tracks acquired effectively over a billion streams and acquired a pleasant chunk of your royalties.

The massive query actually is: What are you as an impartial artist purported to do about this?

Regardless of how you’re feeling about this royalty switcheroo from you to Taylor Swift, leaving Spotify is simply not a practical possibility. Spotify is the place the listeners are, and in order for you your music to be obtainable to be found by potential followers, you’ll have to have it on the platform.

As an rising artist, there are three issues it is best to do:

1. Use Spotify as a music promotion and discovery platform. Don’t fear concerning the royalties an excessive amount of. We stay in a streaming world, and the fact is that for a lot of artists, the royalties from their non-monetizing tracks wouldn’t have been sufficient to purchase a McDonalds Happy Meal. Instead, preserve your tracks there, since you need to be discoverable by music listeners. Spotify is changing into a bit like the brand new radio. That’s the place individuals take heed to music through the day. And with their algorithmic playlists like Release Radar and Discover Weekly, your current followers can be notified you might have new music out, and potential future followers may uncover your tracks.
2. Work to get as lots of your tracks to over 1000 streams a 12 months in order that they monetize. Between e mail, social media, YouTube, and stay performances there are SO many issues you are able to do to drive extra streams out of your songs.
3. Use different channels because the income drivers your music. Make CDs and vinyl records to promote to followers. Perform stay. Sell T-shirts and different merch. Get your music to synch libraries.

If you’re an impartial artist, streaming is for discovery, not for revenue technology. That could also be laborious to simply accept, however it’s the fact of right this moment’s music enterprise. The high 3 or 4% of artists gather the majority of streaming royalties. Until you’re considered one of them, bodily media, stay performances, and synch licensing are your finest alternatives to drive income out of your music. To see the information with extra visuals, watch the video.

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