Spotify’s Changing Royalty Rates Could Lose Songwriters and Publishers Millions
Changes to the way Spotify pays out royalties to music publishers could mean a lot less money going around — and that could mean bad news for artists down the line. According to a new report from Billboard, it’s going to be even harder to get any meaningful return through digital streams on Spotify thanks to a new royalty model that could result in an approximately $150 million reduction in money going to publishers in the first year alone.
That’s not a typo, by the way — $150 million less will make it to the people actually writing the music that Spotify directly benefits from. According to the report, this is all because of pending changes to the service’s existing subscription tiers. Last month, it was revealed that users will have to pay $1 more per month for individual plans and $2 per month more for shared plans. Company officials said that increase was to help offset the cost of adding 15 free hours of audiobook streaming each month instead of raising royalty rates.
As a result of the change, Spotify will pay what it’s calling a “bundle rate” to songwriters for every stream from premium subscribers to further cover the cost of those audiobooks. As a result, Spotify will be able to pay out at about “52% of the total bundle, or around $5.70 per subscriber” if you take into account the current premium rate of $10.99.
These changes are also related to a 2022 settlement with the Copyright Royalty Board, which regulates how rates for streaming royalties are doled out based on publishers, songwriters, associated services, and their business interests. At the time, the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI), and members of the Digital Media Association (DiMA) got together and agreed to a settlement, rather than have to go through a lengthy process.
The long and the short of that decision was that it changed the way bundling worked.
Billboard music publishing reporter Kristin Robinson’s calculations estimate that change alone means “songwriters and publishers will earn an estimated $150 million less in US mechanical royalties from premium, duo, and family plans for the first 12 months that this is in effect, compared to what they would have earned if these three subscriptions were never bundled.” Well, ain’t that a crock o’ horseshit?
That reduction in revenue is also on top of the previously reported change that Spotify would require artists to get at least 1,000 streams before earning any money in a bid to keep “non-music audio content” from siphoning funds. Don’t forget though, you can get more exposure through Spotify — if you’re okay with earning even lower streaming rates.
According to a Spotify spokesperson, the royalties changes reflect terms and conditions already agreed upon by the streaming platform and publishers.
“Spotify is on track to pay publishers and societies more in 2024 than in 2023. As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.”
For a full breakdown of the royalty changes and how they could affect artists moving forward, be sure to check out Robinson’s piece on Billboard.
(Editor’s note: This article was edited to include a statement provided by a Spotify spokesperson. Some wording was changed to reflect that it’s publishers that are seeing the changes, who then pay the songwriters.)
