by Chris Castle

Spotify recently rolled out a quiet but seismic change to its royalty system: if a track doesn’t get at least 1,000 streams in a 12-month period, it earns no royalties. Zero. The company claims this policy is about reducing “fraud” and redirecting money to “working artists,” but behind that PR gloss is a shift that disproportionately harms independent musicians and smaller rightsholders.

Let’s be clear—this isn’t just about removing noise from the system. It’s about redrawing the map of who gets paid in the streaming economy and who gets pushed out.

The Hidden Impact on Artists

At first glance, 1,000 streams might sound like a modest hurdle. But in the aggregate, this threshold excludes potentially millions of tracks from ever receiving a dime—even though Spotify continues to profit from their presence through ad revenue and user engagement. It’s easy to assume the affected tracks belong only to DIY artists or obscure creators. But that’s not necessarily true.

Spotify’s royalty model is track-focused, not artist-focused. You could have a single that racks up a million streams while the rest of the album struggles to clear a few hundred. Those lower-performing tracks—despite being part of a cohesive release—won’t earn a cent. Left to its own devices, the platform favors individual track performance over albums or an artist’s entire catalog. And that has sweeping implications not only for how artists are paid, but for how music is created, released, and valued in the streaming age.

It’s Not About Growing the Pie—It’s About Cutting Out the Bottom

The most revealing part of this policy isn’t what it claims to fix, but what it quietly avoids. Spotify is likely under enormous pressure—from major labels and rights holders—to raise the artist payouts.  No matter how much Spotify denies the per-stream rate, there will always be a per-stream rate even if they pay a “stream share” to a label for the very simple reason that the label has to convert that revenue share into a per stream rate in order to allocate it to their several artists.  That’s as simple as gross vs. net.  

Plus we know just how bad the gross is from indie artists who get paid 100% of the “stream share”.  It’s shit, ok?  That’s why we know Spotify are under pressure to increase royalties.

But arbitrarily raising the total royalty pool would have consequences: it could trigger most-favored-nation clauses, obligate Spotify to pay more across the board.

Another way to raise royalties would be to “flatten” some of the minimum guarantee, i.e., make a portion of it nonrecoupable from future royalty payments.  This was the practice with record clubs—a nonrecoupable payment has the added benefit of not being shared with artists as a kind of catalog-wide payment.  This would also likely trigger MFNs, so that’s not super appealing either.  

So by excluding low-performing tracks from the royalty pool, Spotify isn’t reducing fraud or increasing fairness. It’s reallocating revenue. And not randomly—it’s redistributing it upward. The money those artists would have earned is now being handed to the top-performing tracks, which overwhelmingly belong to major labels and large catalog owners.

Don’t you think that if the goal was to reduce costs, Spotify would just shrink the pie and pocket the difference?  It seems to me that more money to fewer people is likely the real purpose of the 1,000-stream rule.

The Threat of Industry-Wide Collusion

Spotify isn’t alone. Amazon Music and Deezer have introduced similar thresholds, raising serious concerns about whether this is a coordinated move by dominant platforms to marginalize smaller rightsholders. When multiple major services adopt the same gatekeeping metric at the same time, and benefit in the same way, it’s not unreasonable to ask whether they’re acting in lockstep.  In fact, this concept in antitrust law is called tacit collusion (or “conscious parallelism”) which occurs when competitors coordinate their behavior—such as pricing or output—without explicit agreements or communication. Instead of entering into a formal cartel, companies mirror each other’s pricing or business strategies, knowing that mutual restraint benefits all of them

Even if there’s no smoking gun, the outcome is clear: fewer royalties paid to emerging and independent creators, and more concentrated control over who makes money from streaming.

Playlists, Penalties, and Platform Power

Here’s the twist: just because a track falls below 1,000 streams and no longer qualifies for royalties doesn’t mean Spotify stops using it. These sub-threshold tracks don’t vanish—they become part of what we might call Spotify’s “shadow catalog”: music that still populates playlists, fuels the recommendation algorithm, and keeps users listening, but doesn’t generate payouts.

Every time a user plays a low-performing track, Spotify collects engagement data. That information feeds into its personalization systems, sharpening the algorithm’s ability to retain users and increase time-on-platform. That extra engagement helps Spotify serve more ads, train better models, and keep listener churn down. It also enriches Spotify’s advertising and data ecosystem, especially on the free tier where listening time directly translates to ad revenue.

In other words, these unpaid tracks are still part of the machine. Spotify uses them to optimize engagement and advertising—but without paying the creators a cent. It’s profit without payout. Value extraction without compensation. And in the long tail of the music economy, that adds up to millions of tracks silently pulling their weight for free.

So it seems that this is the quid for the pro quo.

A Cautionary Tale for Songwriters

The 1,000-stream threshold is a cautionary tale for songwriters as they approach Phonorecords V. What began as a “fraud prevention” tool is now a benchmark for excluding smaller rights holders from royalties altogether. Streaming services will point to these thresholds as precedent—arguing that if labels can accept payout limits, publishers should too. Without strong opposition, platforms could push for mechanical royalty thresholds that mirror streamshare rules, cutting off compensation to low-earning songs. This isn’t just about recorded music anymore. It’s a warning: once a gate is built, it can be copied—and used to lock out songwriters next.

A Royalty System That Punishes the Wrong People

Spotify’s royalty threshold is spun as a way to fight fraud and reward “working artists,” you know, kind of like don’t be evil.  But in reality, it codifies a system where only the most popular tracks get paid—regardless of how much they contribute to the overall value of the platform.

And when other streaming services follow the same path, it stops looking like business as usual and starts to resemble a coordinated effort to narrow the market and marginalize everyone but the top-tier players.

This isn’t a royalty system built on fairness or transparency. It’s a redistribution scheme—not to help more artists earn a living, but to serve bigger slices to fewer people.

And that should raise alarms far beyond the music industry.  Looking at you, Gail Slater.