With the 2022 global streaming market valued at $17.5 billion, according to the IFPI, up to $1 billion worth of streaming royalties globally is ending up in the wrong hands. Various estimates put fraudulent tracks’ share of listening - at Spotify and elsewhere - at 3% to 10% of total streams. That should incentivize distributors to locate and remove fraudulent tracks before they can get to streaming platforms.
Spotify’s new royalty scheme also imposes financial penalties for music distributors and labels when fraudulent activity has been detected on tracks they uploaded. Tackling fraudulent streams could have a larger impact than a minimum threshold. That was equal to about $46 million in royalties in 2022, based on Spotify’s $9.27 billion cost of sales that year, which represents virtually all royalty payouts. Implementing the threshold will shift about 0.5% of Spotify’s royalty pool to more popular tracks, a source tells Billboard. While this 1,000-stream threshold affects a large number of tracks, it doesn’t impact much of Spotify’s royalties to creators and rights holders.
