Spotify to test ‘promotional’ royalty rate in exchange for more exposure

Spotify have announced their intentions to implement a feature in which artists and labels can agree to receive a lower royalty rate per stream in exchange for prioritising their tracks in the algorithm. Spotify will push these tracks to relevant listeners via Autoplay; the music that is played after a song, EP, or album finishes, and through Artist Radios.

In a statement, Spotify explained:

“Labels or rights holders agree to be paid a promotional recording royalty rate for streams in personalized listening sessions where we provided this service,” 

The feature is completely optional, and for those that choose to use it, Spotify have said that they will still only recommend relevant tracks it believes the listener will like, therefore not necessarily guaranteeing more streams. Spotify’s reasoning behind the lower royalty rate is to make the feature more accessible for smaller artists, as opposed to charging a flat fee that would otherwise be too expensive. Also important to note is that the lower royalty rate will only apply to the streams gained through the service – the normal rate will be applied to all other streams.

There has of course been initial backlash to the announcement – asking artists to receive a lower royalty rate, especially during the current lack of live shows, would never go down too well. Adding to the drama, the streaming giant has been accused of digital payola, which is the illegal music industry practice of paying a radio station to play a song disguised as being part of the normal broadcast.

Whilst there are are no doubt many vocal opponents to the feature, some artists, especially smaller artists trying to gain as much exposure as possible, will no doubt welcome the lower rates. The feature has been labeled as an experiment, so it will be interesting to see whether it is implemented for good, or whether it has a short lifespan.

Image credit: Spotify

Royalty rate

Spotify logo, image credit: Spotify


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