IMPALA - the pan-European organisation for the independent music community - has posed a number of questions to Spotify about the changes it is making to the way it allocates revenue to each track each month.
While some of Spotify’s changes deal with issues that concern much of the wider music community, some are more contentious. And many in the indie and music-maker communities have criticised the lack of consultation about the changes with the music community beyond the major record companies. It will be interesting to see if Spotify responds to IMPALA’s queries.
The questions are as follows…
1. Enabling further debate to ensure safeguards
- Can Spotify suspend the implementation of these new policies to accommodate further debate?
- How do Spotify justify the earnings from one artist's streams being allocated to another artist? Are safeguards possible to prevent the new minimum threshold from creating a two tier system that disproportionately affects smaller and emerging artists and countries, as well as deep catalogue repertoire?
- When flagrant artificial streaming is detected, what level of data and proof will Spotify provide and in what time period, to substantiate decisions to apply fines? Can Spotify's decisions be challenged?
2. Royalty threshold - adjustments and alternatives to a “blunt instrument”
- Can an "opt-in" system be added as a safety net, so that some artists, labels and albums affected can be whitelisted for payment by Spotify based on the past performance (as many artists and labels who were getting micro payments will no longer get them and those earnings will go to other artists)?
- How will longer tracks be accommodated so they don’t lose out? Can this be based on listening time and not number of streams?
- Alternatively, could artists who don't earn anything for the first 1000 streams of a track receive double compensation for streams beyond that threshold, until 2000 streams are met? This would give artists a chance to get back the revenues they are due for the first 1000 streams.
- Are "dynamic thresholds" possible, adjusting the threshold based on market size and Spotify's market penetration in a given territory or language group? If not, does this imply that Spotify's market penetration is uniformly high across all regions, negating the necessity for adaptive threshold measures?
- Could an escrow system be applied? For example, can a track's earnings from the first 1000 streams go into escrow until the artist meets the threshold?
- Counting any minimum stream requirements across an artist's full repertoire rather than breaking it down by tracks would also have a softer impact, can that be considered?
- What about other approaches altogether that are shared across all artists and rightsholders, such as upload or storage fees or other mechanisms to weed out bad actors and tackle misuses of the open platform concept?
3. Transparency & data
Transparency is vital to assess whether the reform's effects are fair and equitable. Can Spotify provide data on how the proposed changes will impact artists and labels, particularly on:
- an aggregated anonymised per artist basis (major, independent, country, genre) on who will benefit and who will lose out.
- an aggregated anonymised per label basis (major, independent, country, genre) on who will benefit and who will lose out.
- on a per country basis.
- the proportion of tracks that earned before that will stop earning, and the number of artists that earned before and will stop earning?
- the shift between catalogue repertoire and new releases.
- how will the changes result in an extra $1bn over the next five years - can details of this calculation be shared?
4. IMPALA’s proposals for streaming reform
- What are Spotify's views on the proposals outlined in IMPALA's plan on how to change allocation of revenues?
- Can these also be integrated into the reform efforts?
- This includes the AIM artist growth model - a model more akin to progressive redistribution, or the pro-rata temporis suggestion to mitigate the iniquities of the streaming model’s treatment of longer music tracks, as well as proposals based on how active fans are, and opportunities to use Spotify’s framework to open entirely new and complementary revenue streams via fan participation.
5. Fairness of algorithms
- How will Spotify guarantee the transparency and fairness of its algorithms in determining whether a track meets the specified thresholds?
6. Difference between recording and publishing
- What is the justification for these measures applying to allocate revenues for the recording sector but not as regards music publishing rights?
7. Impact on discovery
- Does Spotify anticipate a change in release dates (and potential ingestion issues) if labels need to adjust, to ensure a track has the best chances possible to meet the royalty threshold's conditions?
- Has Spotify assessed the impact on discoverability and competition for attention linked to new releases?
- What is the incentive for labels to keep all their repertoire on Spotify and continue to supply all new material?
8. Impact on smaller artists, markets and diversity
- What are Spotify's concrete plans to support diversity and local artists, for example in regions which don’t have a Spotify contact point, or where fans pay the same rate as other markets but the per track payout can be as little as half as much?
- Instead of ploughing all the money generated by the new system up the chain, would Spotify consider dedicating a proportion to boost diversity, or applying the artist growth model?
- Has Spotify considered the potential mental health impact on artists whose repertoire could be qualified as a failure under the new system?
9. Boosting value further
- To boost value further, will Spotify consider other moves? What about stopping remuneration altogether for functional content (not just for tracks less than two minutes) and addressing other features that dilute value such as Discovery Mode?
- Will Spotify also increase its subscription prices further?
- The recent increase is welcome, but can Spotify commit to price increases which at least follow inflation?
10. Regulation and policy updates
- Has the proposal been discussed with any regulators?
- How will potential anti-competitive outcomes be prevented?
- There are situations where labels have contracts and a legal obligation to pay out per stream. Under the new threshold, Spotify would not be paying on those streams, rather diverting the money to other artists and tracks that meet the threshold. What happens if a label’s contracts don't allow them to sign up?
- We understand the reform is presented as a policy and that licensees may decide to renew their deal to continue their relationship with the platform. We assume Spotify is still able to take on suggestions for the threshold and how it works?
- Will the independent sector be involved in the decision-making process when Spotify's policy is reviewed and up for modification?
