Why Spotify’s New Royalty Payout Policy Makes No Sense

Spotify is not YouTube, and implementing a similar threshold for being eligible for earning through streams is exploitative

In April of 2024, Spotify effected its new royalty distribution model, a move the streaming giant claims will redirect an estimated $1 billion in revenue toward “emerging and professional artists” over the next five years. While Spotify frames the update as a necessary modernization to combat fraud and inefficiency, Spotify’s solution inherently is incompatible with the kind of content and material it hosts.

What is Spotify’s Track Monetization Eligibility?

The policy centers on three structural changes designed to plug what Spotify describes as “drains” on the royalty pool:

a) A 1,000-stream threshold,

b) A crackdown on white noise and ASMR, and

c) Fines for artificial streams.

The most significant element of the change is a new eligibility threshold. Tracks must now reach a minimum of 1,000 streams within a rolling 12-month period to be eligible to receive royalties.

Spotify justifies the move by pointing to the “tens of millions” of tracks that previously generated an average of just $0.03 per month. According to the company, these micro-payments rarely reached artists anyway, as they fell below the minimum withdrawal limits set by distributors and banks. By demonetizing these tracks, Spotify intends to pool the “lost” $40 million annual revenue and redistribute it to artists who have achieved a more significant traction.

Spotify’s data apparently suggests that 99.5% of all streams on the platform come from tracks that meet the 1,000-stream threshold, meaning a majority of its catalogue remains unaffected.

Spotify is not YouTube—a monetization threshold mischaracterizes music

The monetization threshold policy enforced by YouTube makes sense for the content it hosts. On YouTube, to be eligible for monetization, a channel needs to get 1,000 subscribers with 4,000 valid public watch hours in the last 12 months or get 1,000 subscribers with 10 million public Shorts views in the last 90 days. By way of this policy, YouTube concentrates on regular and consistent content creators, ensuring that creators who invest in YouTube and make content which gathers interest get rewarded.

However, Spotify is not home for content creators. Well, leaving podcasts apart. Spotify hosts music, not content. Artists and managers cannot directly release or publish music on Spotify—they need to go through distributors or labels. Music released on Spotify or any other streaming platform generally takes a considerable amount of time to be produced and costs a substantial amount of capital investment. Most importantly, music is an art which cannot be compared to content on YouTube. Not to invalidate the creative works of YouTubers, music and content cannot be treated similarly. YouTube rewards consistency and frequency—Spotify treating music similarly illustrates a complete misunderstanding of music. An artist who releases one album and leaves it at that—still deserves to be paid for their streams.

Spotify cannot expect artists to leave their music—however unpopular—to charity Spotify’s royalty pool. A song deserves the same respect and treatment, whether it has 10 streams or 10 million.

Spotify needs to stop pushing blame around and pay up

According to Royalty Exchange (as updated on March 4, 2025), Spotify pays royalties of an average $0.00318 per stream. This is miniscule in comparison to TIDAL’s $0.01284 and Apple Music’s $0.01. According to Qobuz, it distributed $0.01873 per stream in royalties to labels and publishers for streams in FY 2023-24.

Spotify clearly shifts blame onto factors other than the fact that it pays its artists miserably low for the market share it holds. Enforcing a threshold to be eligible to draw streams is prejudicial to artists and undermines the art.