Music streaming giant Spotify has often received flak for its lackluster royalties.
In a new offering, Spotify is offering artists and labels to promote their tracks under recommendations in exchange for an even lower royalty payment. They say this will give the artists and labels the chance to influence its recommendation algorithm in exchange for a ‘promotional royalty rate’. Spotify recommendations are tracks that autoplay when you’ve finished listening to a searched song, EP, or album and also Spotify radio which is the feature that allows listeners to start a ‘station’ based on a track or artist. This feature will not apply to playlists.
In order to cash in on this and influence the Spotify algorithm, the artists and labels will have to accept the ‘promotional royalty rate’. That means if you want to influence Spotify’s algorithm in order to favour your track to relevant listeners, you will receive a lower royalty payment if a play occurs based on that recommendation.
Speaking about this in a release, the company said, “Spotify drives 16 billion artist discoveries every month, meaning 16 billion times a month, fans listen to an artist they have never heard before on Spotify. We’re proud of that and are actively refining our algorithms to enable even more fan discoveries of new artists each month.”
They went on to explain why they were doing this and how it works for both sides saying, “Artists tell us they want more opportunities to connect with new listeners, and we believe our recommendations should also be informed by artists—their priorities and what they have to say about their music. And soon, we will roll out a test of a service that gives artists a say in how their music is discovered.”
Focussed on the radio and autoplay formats, the feature will require no down payment. Spotify clarified how it will play out explaining, “To ensure the tool is accessible to artists at any stage of their careers, it won’t require any upfront budget. Instead, labels or rights holders agree to be paid a promotional recording royalty rate for streams in personalized listening sessions where we provided this service. If the songs resonate with listeners, we’ll keep trying them in similar sessions. If the songs don’t perform well, they’ll quickly be pulled back. Listener satisfaction is our priority—we won’t guarantee placement to labels or artists, and we only ever recommend music we think listeners will want to hear.”
While playing the algorithm sounds like it’ll be helpful to artists on the surface, it also reduces their already meager royalties close to fractions of pennies. So while this will definitely remain a controversial chapter, Spotify is going to go ahead with testing it out.
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