Understanding how streaming on Spotify works in more detail is absolutely worth it. This way, musicians can solve one of the most controversial issues in the market — how profitable and rewarding the practice actually is.
While some believe it only benefits major labels, others think it is a good service for beginners to increase their revenues. Stay tuned to learn the story behind song releases and further streaming to see if it is worth to buy Spotify streams.
How Things Worked Before
Undoubtedly, the distinguished music streaming system greatly impacts how the industry works and evolves — over $40 billion spent on paying out royalties, which make up 20% of the worldwide revenues for music records. The musician’s income depended on the number of streams in the system — the more, the better.
As a rule, a musician could expect up to $0,005 per stream. For instance, for nearly seven billion streams combined for three music albums, Taylor Swift potentially earned not less than $34 million.
However, this classic scheme has undergone several significant changes recently. The driving mechanisms behind this boil down to the factors below:
- These modifications are for improving the streaming quality and making it fair, fighting back against artificial tricks to increase the number of streams.
- By collaborating with artists, independent brands, and other experts in the industry, Spotify focuses on solving the issues with the noise in the field, which can result in an extra billion dollars in royalties in the course of five years.
- The goal is to ensure even small payments will reach their target recipient.
Modernized Royalty Policies on Spotify
With millions of tracks in the system, the revenue generated on Spotify and the one obtained were two distinctive sums of money. Not only does the banking environment provide its own rules of the game, implementing extra charges for transactions, but also there is a required minimum to reach to be able to withdraw streaming-created income overall.
In turn, if a musician makes their first steps in the market and doesn’t gain thousands of streams per track, the imperfections of the system simply nullify their rewards. As of early 2024, Spotify will alter its approach to royalties distribution and calculation:
- The platform will reward recorded royalties to musicians with tracks that achieved one thousand streams or more and were released in the previous year.
- The pool for royalties distribution will remain the same. Nevertheless, instead of increasing its own revenue, Spotify will invest more money to boost the profitability of eligible songs on the platform.
- The requirement for the minimum length of the track will also change — not less than two minutes in 2024. Otherwise, it will be impossible to generate royalties for a musician. At the same time, the policy’s objective is to improve the quality of content and reduce the number of sound effects, sound recordings, and other tricks to earn cash through the so-called noise, namely, functional styles of “music.”
All in all, these initiatives are just the tip of the iceberg of more upcoming changes and innovations in the way Spotify will work. For musicians, it is crucial to track such modifications — everything to ensure they get control over their revenue and know unique methods for improving the value of their content on the platform.