Nairobi News

Effective April 1, 2024, Spotify, the world’s largest music streaming service, a new royalty model took effect that is set to affect the lowest streaming artistes in the country as well as music distributors.

Spotify had in October last year announced its intention to introduce the new royalty model that will now not pay artistes in Kenya and the world, whose tracks don’t hit 1,000 streams in a year.

In a statement on its website, the digital service provider (DSP) said the new streaming royalty model will ensure an increase in the royalty pool benefiting legitimate artistes by deterring artificial streaming, enhancing distribution of small payments that haven’t been reaching artistes and also get rid of bad actors who upload non-music noise tracks such as sleep, rain and oceans sounds, targeting streams which Spotify terms as continuous “attempt to steal money from the royalty pool that should be delivered to honest hardworking artists”.

The adjustments to Spotify’s new monetization model stemmed from three identified core weaknesses within the platform with the first change that is set to affect a majority of Kenya artistes (as this is where most of them if not all pool), being the introduction of;

Minimum number of streams to start earning

It’s arguably the most controversial modification that has caught most people’s attention where a minimum threshold of 1,000 streams within 12 months for a track will be required to earn royalties. This threshold will de-monetize tracks that had previously received 0.5% of Spotify’s royalty pool.

Simply put, this new policy will reduce the payouts for fraudulent streams and functional tracks (non-music) that do not represent genuine musical consumption.

“Starting in April 2024, tracks must have reached a threshold of at least 1,000 streams in the previous 12 months to be included in the recorded music royalty pool calculation. There’s also a minimum number of unique listeners required for a track to become eligible to ensure users can’t game the system by streaming the track hundreds of times in order to qualify. We don’t share this number publicly to prevent further manipulation by bad actors,” Spotify states.

This modification has however sparked debates around some quarters within the music business in the country with some questioning the ethics of not paying artists for whatever streams they garnered simply because they were not popular enough.

Others however do support this change citing the paltry sums an artist would be making for under 1,000 annual streams anyway.

“The changes are good because they’re enhancing efficiency and further optimizing the platform. ⁠In the short run it’ll be a slight disadvantage to the emerging artists because reaching 1000 streams takes the backing of a lot of promotion and play-listing. However, in the long run, it’ll be beneficial because artists will now have a specific target to work towards and put in the maximum effort to boost streams,” argues Camilla Owora, former Regional Manager, East Africa at Ziiki Media Music Distribution stable.

But according to Spotify, this modification will ensure tens of millions of dollars per year paid out to emerging and professional artists.

“Tracks with between 1 and 1,000 annual streams generate USD 0.03 (Ksh4) per month on average and only represent 0.5% of total streams and royalties generated from Spotify. In the aggregate though, that money adds up to tens of millions of dollars per year. Moving forward, that money is reallocated by streamshare to increase the payments going to eligible tracks,” Spotify explains.

In other words, the change will ensure each of the eligible tracks on Spotify generates
0.5 percent more royalties.

Music Publisher and Distributor Bernard Kioko of Bernsoft Group Ltd argues that, with the changes, Kenyan artistes are at a disadvantage, especially for those who sing in other dialects other than English.

“Take a top Kikuyu artiste for instance who is on Spotify and who doesn’t have the whole world to listen to his music in English, how will he get to those numbers? So the question then becomes, on an individual capacity as a Kenyan, how many Kenyan artistes can generate 1,000 streams per year with ease? Would they even get to ten in numbers, I have my doubts? So this means a lot of our artists putting songs on Spotify will be giving their money to foreigners because their small amounts will be aggregated and distributed to those popular ones,” Kioko argues.

According to Spotify’s Loud and Clear – a site dedicated to increase transparency by sharing new data on the DSP royalty payments and process – just 37.5 million tracks out of the more than 100 million on Spotify have surpassed 1,000 streams.

This implies some two-thirds of all songs hosted by Spotify have not reached payment eligibility.

It’s clear most of the songs on Spotify belong to this group the two-thirds. This is also where a majority of the country’s artists fall, keeping in mind that in developing countries like Kenya, the streaming culture is still nascent.

It’s these two-thirds earnings from those tracks that fall short of the minimum threshold of streams that will now be pooled into the new shared common fund called Streamshare.

At a quick glance, this common fund would seem like an insignificant amount.

However, once aggregated, these relatively small sums previously paid to copyright holders of the tracks will amass to tens of millions which will then be redistributed to the most popular musicians resulting in increased earnings.

This new Spotify minimum criteria model modification which will end up allocating more royalties to popular musicians, is nothing new in the modern music world. Since 2018, YouTube has applied this minimum constantly revising and upgrading it. The platform’s rules back then were 4,000 hours of content viewing per year and at least 1,000 subscribers to the channel.

So far most of the funds on Spotify have always been allocated to the most popular musicians whether you listen to them or not.

The reason for this is the complex algorithm that Spotify has when it comes to the distribution of royalties. For an average user who listens to 500 songs per month, out of every USD 10 dollars paid, only USD 2 will be paid to the songs you listen to, and the remaining USD 8 dollars is paid to the songs you don’t listen to.

This change will affect musicians the most, especially the unpopular performers
with their earnings being as minimal as those of those who are popular sores. Music distributors will equally be affected by the change.

“The changes will affect all artists, some more than others. For the popular ones and the more established ones, the ‘pinch’ might not be too bad. In the long-run artists stand the chance to make more if they maximize on the platform and opportunities it offers,” Owora observes.

From her previous experience with Ziiki Media distributing music of more established and emerging artistes in East Africa, Owora lists examples of artistes she would cluster as popular in the region.

“When I worked at Ziiki the artists we saw who have strong listenership on Spotify are Sauti Sol, Otile Brown, Diamond Platnumz, Harmonize, Rayvanny just to mention a few. A major contributor to this is that their music is streamed on a global level, which has enhanced their streams.” Ms Owora says.

As for Spotify, it feels that “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, as they do not surpass distributor’s minimum payout threshold,” read’s the statement.

To Kioko, the statement by Spotify is all about acting nice.

“What Spotify is experiencing we already have in Kenya. In music, it’s always the 20 per cent that makes money the rest 80 doesn’t but the effort needed to attend to them is equal. We already have a similar scenario here with Skiza tunes. For instance, a Skiza content provider will have 1,000 artistes each with 10 songs that’s 10,000 songs and only three artistes are making money that service provider has to provide customer service and attend to all the 1,000 artistes equally but half of them are saying they are not getting paid yet they aren’t making money but won’t say that. It’s a kind of by Spotify saying, ‘You are on our platform, you are costing us but not making money, so if you can’t get to 1,000 streams we will redistribute those monies to those making money because when they do we also make money,’ Kioko observes.

Financial penalties
Another modification introduced is a financial penalty for distributors and labels that upload tracks with fraudulent activities such as bots or click farms, by deducting royalties or suspending accounts.

Minimum play time
Is the last modification in the new model that requires a minimum playtime of 30 seconds for non-music tracks such as podcasts or audiobooks to be able to generate royalties. This is to prevent users from skipping through content and triggering payouts for incomplete listens.

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