Estimated reading time: 7 minutes
I recently made a video about how much money Spotify stole from independent artists in 2024.
I calculated that because of Spotify’s policy change to stop paying royalties on tracks with under 1000 streams in a year, $47 million in royalties was withheld from small independent artists like you last year and was instead diverted to artists with tracks with over 1000 streams. This means that the bulk of the royalties you were entitled to but didn’t receive went to Taylor Swift, the Weeknd, Bad Bunny, Drake, and Billie Eilish.
Actually, that’s not quite true. They mostly went to Universal Music Group, Warner Music, and Sony Music — the three majors. That’s right, the very modest royalties you used to get for your tracks with less than 1000 streams are now going to — mostly — the majors.
So when that video and the corresponding Disc Makers blog post were recently published by Hypebot, Spotify actually responded — in the most disingenuous way imaginable.
I’m going to respond to their response here, because no one else will hold them accountable for the patently unfair practice of demonetizing tracks with under 1000 streams. I know artists think it’s unfair. I hear from them all the time. Just read the comments in my video above.
And I know the big distributors — Distrokid, Tunecore, and CD Baby — find it unfair. But they get SO much of their royalty money from Spotify that they are afraid to speak up.
So here is Spotify’s whole response to my video, and I’m going to add my comments to their response. I’ll break their response into pieces that I’ll address individually. Here goes:
“More than 1.34 million songs have surpassed a million streams, and more than 1,000 songs have more than a billion streams.”
Great Spotify, but that is immaterial to this discussion about songs with under a thousand streams.
“99.5% of all streams are of tracks that have at least 1,000 annual streams, and each of those tracks earn more under our policy.”
That data is spun SO hard to make their ugly baby look pretty. It’s true that tracks that stream under 1000 streams in a year don’t total a ton of streams. But it DOES represent a ton of tracks! More on that later.
So yes, when you take all the tracks the majors have on Spotify, all those legacy artists, and all artists on indie labels, plus popular indie artists with over 1000 streams per track, I can totally see that most streams — even 99.5% of streams — come from those tracks. But that’s ALSO not the point!
The fact that “each of those tracks earn more under your policy” IS the point, however. Because, dear artist, it is those $47 million in royalties that used to monetize for you, which are now redirected to more popular artists who don’t need your royalties! They have enough fans of their own. They make enough of their own royalties!
And they continue:
“This policy targets the population of tens of millions of tracks on Spotify that generate only 2 cents per month on average.”
Again, spinning data to make it sound convincing doesn’t make it right. In fact, Spotify’s own data shows that of the 202 million tracks on the platform, over 175 million are now demonetized because they don’t reach the 1000 stream annual threshold. Somehow 175 million feels like a lot more than “tens of millions.”
And at just 2 cents per track per month, that still represents in Spotify’s calculation over $3.5 million in royalties from small emerging acts that they are diverting to the big guys.
Next…
”In the aggregate, these tracks with under 1,000 annual streams represent approximately half a percent of total streams (and therefore half a percent of the total royalty pool). Now that Spotify’s royalty pool has become so large — over $10 billion in 2024 alone — half a percent is a material amount.”
Turns out my estimate of $47 million in royalties diverted was pretty accurate, because half a percent of $10 billion is $50 million. And indeed, that is — in Spotify’s own words — a material amount.
A material amount that has been taken away from small emerging artists and redistributed to larger artists in a reverse Robin Hood move.
Now here’s the kicker, and the outright lie that Spotify wants you to believe:
“Our policy helps ensure that as much money as possible reaches the emerging and professional artists that our platform is built to support. Because labels and distributors require a minimum amount to withdraw (usually $2-$50 per withdrawal), and banks charge a fee for the transaction (usually $1-$20 per withdrawal), these small monthly payments often don’t reach the uploaders.”
This is untrue. Sure, some of the money you are diverting is going to emerging artists whose tracks have over 1000 streams. But since you are redistributing those royalties proportionate to the number of streams of the tracks you are distributing them to, the vast majority of royalties are going to Taylor Swift for the 27 billion streams she had last year.
I mean, nothing against Taylor — she deserves the royalties from her streams. But she doesn’t also deserve a piece of your collective $47 million in demonetized independent artist royalties!
And this blatant lie about distributors’ minimum payments making it impractical to pay royalties to small artists … come on, man! You know that’s just not true. How can I be so sure?
Because I was CEO of CD Baby’s parent company from 2008 to 2019. Those small monthly artist royalty payments just keep gradually growing in those artists’ accounts until they amount to $50, $100, or $300, and then the artists withdraw them. Implying that an artist wants to withdraw $2 and needs to pay a fee of a dollar for that is just disingenuous.
By the way, Spotify is almost implying they had something to do with making those micro payments to those tens of millions of small artists, when in fact ALL they are doing is making a slightly smaller royalty payment to CD Baby, Distrokid, and Tunecore every month.
One reason why those aggregators strongly disagree with this Spotify policy as well: They know it’s patently unfair to their artists, but they are afraid to say anything publicly out of fear of backlash from Spotify, who is their single biggest royalty payer every month.
The irony is this doesn’t even save Spotify any work. They still need to track every stream, and account for it and report on it — even if they’re not paying you. And, irony of ironies, on those 175 million sub-1000 stream tracks, Spotify still needs to pay the publishing, even if a track only has a couple of streams!
I’ll state this for the record: I don’t think Spotify ever wanted to change their policy. But then Lucien Grange, Chairman of Universal Music Group, strong-armed them into shifting to Universal’s “artist centric” payment model, which should have been called “major artist centric,” because you, the little guy, keep getting the shaft every month.
Here’s the last bit of Spotify’s response:
“We believe it’s more impactful for these tens of millions of dollars per year to increase payments to those most dependent on streaming revenue, rather than being spread out in tiny payments that typically don’t even reach an artist.”
Spotify is like those billionaires we see on TV, who have lost complete touch with what it’s like to be a working artist today, trying to make ends meet. That $50 or $100 royalty check once a quarter, or once a year, is so much more meaningful to a new band or a struggling artist than some tiny fraction of that $50 or $100 that might get distributed to another artist a few rungs up the ladder.
But hey, look, I’m actually surprised — and pleased — that Spotify responded to my blog post and video. They validated my numbers and acknowledged that it is — in their own words — a “material amount” that they are withholding from all of you collectively, and redistributing to others.
And that just goes to prove my original point. Spotify’s Orwellian-named “artist centric” royalty model is unfair to the many millions of artists at the bottom of the pyramid — artists who really need those royalties to buy a pack of strings, or a pair of drumsticks, or to put some gas into the tank of their van.
And the funniest thing? While they’re sticking it to you, it’s not saving them any work or any money!
And frankly, that’s either mean-spirited, or cowardly, because they’re afraid to stand up to Universal and the other majors.
So I hereby call on Spotify — and the other streaming platforms — to pay the royalties that are earned on every track to its legitimate rightsholder, regardless of the number of streams.
And in case you’re wondering, I have no dog in this fight. Disc Makers doesn’t earn a penny in Spotify royalties.
Paying every artist, no matter how small, for streams they legitimately generated is just the right thing to do.
(If you prefer to see my response to Spotify (with bonus visuals), check out my video.)
Tony van Veen
Tony van Veen is the CEO of DIY Media Group, the parent company of Disc Makers and BookBaby. As a college student, he played in indie bands, created his own LPs, cassettes, and t-shirts, and sold them at shows. Today, he collects CDs, vinyl LPs, and concert t-shirts to support the artists he loves.
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