A new study from Bulgarian trade group ANMIP says that Spotify’s royalty payment threshold, introduced last year, disproportionately affects artists and labels in smaller markets such as Bulgaria, Serbia, Romania, North Macedonia and Albania.
With changes to the streaming business model of this kind, the study concludes, “artists from South East Europe are at risk of cultural erasure on the world’s largest music streaming platform”.
ANMIP-BG adds, “for years, Spotify has insisted that its platform is a neutral marketplace - a democratic space where ‘the best music wins’”. However, the trade group’s research “paints a very different picture: one where algorithmic bias, structural market disadvantages, and a quietly-implemented monetisation threshold have begun to redraw the borders of Europe’s cultural ecosystem”.
Spotify introduced the payment threshold under pressure from the major record companies and especially Universal Music. It means that tracks must receive 1000 streams from 50 unique users in a twelve month period to be allocated any royalties. This demonetisation of millions of tracks on the Spotify platform means there is more money in the royalty pool to be shared with the rest of the music industry.
When the thresholds were introduced, Spotify and the majors argued that artists falling below the threshold were mainly hobbyist musicians who didn’t make much money from streaming anyway.
But the change to the business model also impacts on indie labels with sizeable catalogues, who may have many tracks just below the threshold, meaning in aggregate the losses resulting from the change in payment rules are more significant
ANMIP surveyed more than 70 indie labels in South East Europe, of which 65% said that the introduction of the threshold had “significantly affected their revenue”. A further 20% said they had only seen a “slight decrease” in revenue so far, but expressed concerns that the thresholds might be raised in the future, which could have a bigger impact on their earnings.
92% of those surveyed opposed the changes made to Spotify’s royalty rules last year, describing them as “inequitable” and “disadvantageous to smaller or independent artists”. The study itself concludes that the changes “disproportionately impact labels with extensive catalogues and a diverse range of genres”.
Despite Universal Music claiming that the introduction of the royalty payment thresholds resulted in an “artist-centric” approach to streaming, no artists were consulted before the changes were made, and nor were any indie labels. Critics also argue that the threshold was set based on assumptions about streaming revenues in major markets like the US, UK and Germany, but then applied globally.
That the majors can pressure streaming services into making changes to their royalty models that primarily benefit the biggest rightsholders, but which are then forced onto the entire industry, has raised various competition law concerns. The fact Universal is currently trying to further increase its dominance over the digital music pipeline by acquiring the Downtown group has only heightened those concerns.
Though it’s not just the royalty payment threshold that is disadvantageous to markets like those in South East Europe. An earlier study showed that artists and labels in markets like Bulgaria are also generally disconnected from Spotify’s editorial and playlisting operations, making the streaming service’s algorithm even more influential on those regions.
In a statement accompanying the new study, ANMIP-BG says, “the absence of Balkan-based editors, metadata specialists and culturally informed playlisting means local genres lack representation and algorithmic foothold, pushing artists toward English-language output in order to survive”.
The earlier report made a number of recommendations for the streaming services, and government and cultural institutions across the European Union.
That included the removal of the 1000 stream threshold, the appointment of regional editors and metadata specialists in South East Europe, geographic diversity requirements for streaming services and oversight of algorithmic practices impacting cultural representation.
Ruth Koleva - Chair of ANMIP-BG and founder of Bulgaria’s SoAlive Music Conference - adds, “When Spotify’s algorithm doesn’t ‘see’ us, Europe doesn’t hear us. This is no longer just a music industry issue. It is a cultural equality issue”.