Spotify Sued Over Royalty Rules That Allegedly Harm Independent Artists

A new lawsuit claims Spotify’s 1,000-play royalty threshold and stream-filtering policies have led to a “systemic suppression” of indie artist compensation.

Mark Kratter, an independent musician and attorney living in Connecticut, sued Spotify last Wednesday (June 3) for alleged violations of the state’s Unfair Trade Practices Act. The lawsuit, obtained by Billboard , claims the streaming giant “employs opaque rules and undisclosed filtering criteria that disproportionately harm independent artists, including plaintiff, while benefiting major labels and high-volume catalogs.”

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“This action arises from Spotify’s undisclosed, unfair and deceptive business practices that materially reduce compensation to small creators by filtering legitimate listening activity, failing to count key engagement signals, suppressing algorithmic discovery, and imposing a 1,000-stream minimum threshold before any royalties are paid,” reads the complaint.

Since 2024, Spotify’s policy has been that a song must reach 1,000 streams within 12 months before becoming eligible for payouts from the royalty pool. Kratter’s lawsuit alleges that this threshold, already difficult for many indie artists to meet, has become even less attainable in recent months.

The complaint alleges that starting in March 2026, Kratter’s songs saw a “sharp and measurable decline in counted streams, despite continued listener activity.” He concludes that this must be the result of new filtering policies in which Spotify does not count certain autoplay, algorithmic and “low interaction” listening sessions towards an artist’s official stream count.

“But for Spotify’s undisclosed filtering practices, plaintiff’s tracks would have exceeded the 1,000-stream threshold, maintained normal discovery levels, and continued to generate royalty-bearing algorithmic exposure,” reads the lawsuit.

Kratter is seeking unspecified financial damages through the lawsuit. He also wants a judge to declare that Spotify’s 1,000-play threshold and stream-filtering policies “constitute unfair and deceptive practices under Connecticut law.”

While Spotify has enacted numerous new policies in recent years to counteract streaming fraud, there is no public indication that a rule change went into effect in March. A Spotify rep declined to comment on the lawsuit, but referred Billboard to a 2023 blog post explaining the company’s decision to introduce a 1,000-stream threshold.

In that blog post, Spotify said tracks with under 1,000 streams generated an average of only three cents per month. “It’s more impactful for these tens of millions of dollars per year to increase payments to those most dependent on streaming revenue — rather than being spread out in tiny payments that typically don’t even reach an artist (as they do not surpass distributors’ minimum payout thresholds),” read the post. “99.5% of all streams are of tracks that have at least 1,000 annual streams, and each of those tracks will earn more under this policy. We also believe the policy will eliminate one strategy used to attempt to game the system or hide artificial streaming, as uploaders will no longer be able to generate pennies from an extremely high volume of tracks.”

_Originally reported by [Billboard](https://www.billboard.com/pro/spotify-lawsuit-royalty-rules-hurt-indie-artists/)._