The company is planning changes to its royalty model for 2024 that will disqualify some tracks from payments and increase penalties for fraud.
Spotify is planning to implement changes to its streaming royalty model in early 2024 that would affect the lowest-streaming acts, non-music noise tracks and distributors and labels committing fraud, sources tellConversations have been going on for weeks with the major record labels, Universal Music Group, Sony Music Entertainment and Warner Music Group, as well as independent labels and distributors, sources say.
A minimum play-time length that non-music noise tracks, such as bird sounds or white noise, must reach to generate royalties. Spotify will need new agreements to the royalty structure changes with most record labels and distributors to implement the plan, but that doesn’t mean entirely new licensing renewals. Changes can be made specifically for these elements, sources say. And since the major labels — which all negotiate their deal renewals with Spotify on different timelines — are likely to benefit from the new terms, they are all likely to sign onto them.
The standard, existing pro-rata streaming model has been a major topic of consideration this year, ever since Universal Music Group CEOcalled for an “updated model” for the business that will be “an innovative, ‘artist-centric’ model that values all subscribers and rewards the music they love” in his annual New Year’s letter to staff.
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