Spotify's Royalty Scandal Explained
- Basil M Jose
- Jul 17
- 3 min read
The Royalty Policy That Shook the Music World
A significant change to Spotify's royalty policy was made in 2024, and it had far-reaching effects on independent and small artists. Royalties would no longer be paid to tracks with fewer than 1,000 annual streams. This may appear to be a simplification at first glance, but if you look more closely, you'll find that tens of millions of dollars have been redistributed away from the very creators who most need it.
Tony Van Veen, a veteran of the music industry, recently revealed the full effects of this shift in an engaging article and video. According to his analysis, major labels and well-known artists received $47 million in royalties that were originally intended for small artists.
📺 Watch Tony’s full breakdown here 👇:
The Math Behind the Controversy
Tony van Veen goes over the numbers with us in detail. According to Spotify:
Tracks with more than 1,000 streams per year receive 99.5% of all streams.
On average, tracks with less than 1000 annual streams only make 2¢ per month.
Just 0.5% of the total stream volume and, consequently, the royalty pool is made up of these "low-performing" songs.
The catch, though, lies in what Spotify doesn't highlight:
Currently, 175 million of Spotify's 202 million tracks are demonetised.
Even at 2¢ a month, that's more than $3.5 million a month, or about $47 million annually.
The $47 million is being diverted to the most popular songs rather than being saved.
Where Does That Money Go? (Spotify royalty scandal)
Spotify claims this new model benefits “emerging and professional artists.” But as Tony points out, the money is redistributed based on stream volume. This means:
Most of it goes to major label artists: Taylor Swift, Drake, Bad Bunny, The Weeknd, and Billie Eilish.
In reality, a large portion flows to Universal Music Group, Warner Music, and Sony Music.
This is a classic "reverse Robin Hood" move. It takes from many small artists and gives to the few who are already thriving.
The Flawed Logic of “Efficiency”
Spotify’s defence includes this logic:
“Because distributors require a minimum withdrawal amount and banks charge fees, tiny payments rarely reach artists.”
Tony, the former CEO of CD Baby’s parent company from 2008 to 2019, considers this misleading at best:
Distributors collect royalties until they reach a threshold, like $50 or $100.
No one is paying $1 bank fees to withdraw $2 every month.
This policy doesn’t save Spotify any work. It still has to log and report every stream, even if no royalty is paid.
Who Is Really Behind the Policy?
Tony suggests this wasn’t Spotify’s idea. Instead, pressure from Universal Music Group, especially its chairman Lucian Grainge, pushed Spotify toward this “artist-centric” model.
But calling it “artist-centric” is misleading. As Tony puts it:
“It should’ve been called ‘major artist-centric,’ because the little guy keeps getting the shaft.”
The Human Cost of Demonetization
What might seem like “just a few cents” each month to Spotify is crucial money for small artists.
A $50 check could mean buying new guitar strings.
A $100 payout might cover a tank of gas to reach the next gig.
For many, it’s not about making a profit; it’s about survival.
Tony argues that Spotify’s decision shows a gap between the company’s understanding and the reality of being an emerging musician.
Why Isn’t Anyone Else Speaking Up?
Tony also reveals a troubling truth: distributors like DistroKid, TuneCore, and CD Baby do not support the policy but choose to stay silent. Why?
Spotify is their largest source of royalties.
Even companies dedicated to supporting independent musicians depend financially on Spotify, making it risky for them to speak out.
What Needs to Happen Next?
Tony’s final message is simple but powerful:
“Every artist deserves to be paid for every stream.”
Whether you have 10 streams or 10 million, the principle remains: your work has value, and the platform you distribute it on shouldn’t determine if you deserve to be compensated.
Final Thoughts
Spotify’s policy shift makes sense for major labels and investors. However, it hurts the grassroots creators who started the streaming revolution. As Tony shows, this isn’t just about money; it’s about principles.
🎥 If you haven’t yet, watch Tony’s full video here:
What Do You Think?
Are you an independent artist affected by this policy?
Have your Spotify royalties changed since 2024?
Should every stream count?
👉 Share your experience in the comments or on social using #PayEveryArtist.
If you're an artist, music fan, or industry professional, spread the word about Spotify Royalty Scandal. The more light we shine on these policies, the harder they’ll be to ignore.
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