Sound Bias: the surprising impact of Spotify’s royalty payment threshold on mid-tier artists

In April 2024, Spotify eliminated royalties for tracks with fewer than 1,000 annual streams, justifying the move as a deterrent to streaming fraud, a way to clean up “noise” content and a fix for “trapped” micropayments. Spotify asserted that these changes would benefit “emerging and professional artists” and claimed the policy would not affect music discovery or promotion.This study rigorously tests those claims using a 21-month, 42,000-observation dataset normalized for Spotify’s user growth. By applying difference-in-differences, regression discontinuity and event study designs across artist tiers and career stages, the analysis isolates the policy’s true effects.Contrary to its stated intent, the policy produced a paradoxical outcome: mid-tier artists (10,000–100,000 listeners) experienced a 20% drop in market share growth, while artists already on an upward trajectory captured nearly all the gains. These effects emerged gradually, reflecting algorithmic recalibration rather than immediate changes in listener behaviour, and remained robust across multiple sensitivity checks. Notably, the anticipated substitution effect, where attention would shift to adjacent tiers, did not materialize.These findings reveal that even policies framed as technical or anti-fraud measures can act as powerful infrastructural interventions, quietly amplifying existing inequalities. Rather than democratizing the platform, Spotify’s threshold deepened market concentration and favoured those already poised to benefit. These results highlight the need for rigorous, forward-looking assessment of policy interventions to fully understand their systemic impacts.