Spotify Tool Promotes Songs for Wider Reach in Exchange for Lower Royalty Rates

Spotify is one of the most influential music streaming platform allowing artists to promote their songs to greater audience, so they get more chances of having their songs repeatedly streamed and earn more money.

On November 2, Spotify rolled out a tool that would let artists choose the songs they want to promote to get wider audience reach, but the streaming company will give them lower royalty rates.

Currently, Spotify discovers around 16 billion artists every month, giving fans 16 billion chances of listening to a new artist on the platform. The streaming company has refined its algorithms to allow more fans to know more artists they have never heard before.

Spotify tool promotes songs for wider reach

According to The Next Web, the new Spotify tool is currently being tested to allow record labels and artists to identify the music they want to prioritize while its system boosts the algorithm that regulates the listening channels. Artists or labels may pick a new song or a special record, and even a viral moment they want to promote.

However, record labels no need to set a budget like other promotional campaign. Instead, they will be asked to agree on receiving a "promotional recording royalty rate," which is lower than the regular royalty per stream.

The selected songs will be boosted in automatically-generated radios. When more and more people listen to these songs, Spotify will continue boosting them. However, the song will be dropped from the promotion when it got insufficient number of streaming, although Spotify did not provide the criteria on what it considers as success or failure.

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Music industry not happy with Spotify's new streaming deal

Spotify product marketing lead Charleton Lamb told Music Ally that this does not mean less royalties as labels can still receive greater returns when a track is well performing.

While Spotify has not yet revealed how much it pays per stream, various reports said it is between $0.0033 and $0.0047, so a song has to be played for thousands of times for an artist to substantially earn.

In an open letter published by the Union of Musicians and Allied Workers (UMAW) last week, they demand at least 1% earning per stream. The group of independent artists, which aims to fight for justice in the music industry. "We are calling on Spotify to deliver increased royalty payments, transparency in their practices, and to stop fighting artists," UMAW said on the petition, which has been signed by more than 16,000 artists.

Unfortunately, with the new Spotify tool, music artists and executives are not happy as they will have less income from their songs. According to Anna Yvette: "Soooo .... this is payola .... and that's illegal ...."

Twitter user Brandon Stachel said: "This is payolla but only the service provider wins financially."

Another user criticized Spotify, which used to be a platform for budding artists. "Spotify started out as a platform to support small indie artists that can't afford to kiss major labels's boots. What happened?" said Mango.

The lower rates may suit best popular artists who are already earning a lot to as they can afford to promote a song for few days. However, budding musicians can benefit from this tool if their songs get promoted well and they become popular and get more gigs.

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Written by CJ Robles