The Big Carve Out

The Desperation Gate

Let’s get right to it—music streaming’s value as a revenue generator is increasingly at risk. The introduction of play threshold mechanics into its economic structure only underscores this fragility, exposing the fault lines of a model that was never built to scale equitably.

What Is a Play Threshold?

Over the past two years, streaming platforms have implemented performance thresholds to filter out low-engagement tracks, redirecting payouts toward music deemed "actively" streamed. It’s a mechanism that claims to weed out artificial or incidental plays, but in reality, it’s more of an economic reflex—a desperate reaction to a structural problem, not a measured solution.

While the 1,000-play threshold was initially introduced as a way to curb fraudulent streaming activity and redirect value toward music with widespread engagement, its application has grown beyond its original scope. Major rightsholders—most notably Universal Music Group—publicly advocated for its implementation, positioning it as a corrective step toward a fairer, cleaner streaming economy.

But like many stopgap solutions in music economics, a measure intended to restore order has ended up creating its own form of distortion.

The truth is, these thresholds are less about ensuring fairness and more about maintaining profitability. The platforms are fumbling for a stopgap to reinforce a fractured revenue model.

The Core Issue

The problem is foundational: The pro-rata model on which streaming platforms were built is inherently flawed. As more music floods the platforms, earned royalties become increasingly diluted. The mathematical reality is blunt: unless the model is fundamentally restructured, growth for some can only come through exclusion or elimination of others.

What this begins to resemble is a turf war—a quiet economic détente where power consolidates under a few dominant players, shoring up profitability by managing scarcity.

Market Realities

The numbers are telling.

Independent labels—those outside the major label system—outpaced the growth of majors in 2024, growing 8.4% compared to 5.4%.

But streaming revenue growth overall sharply slowed, climbing just 6.2% in 2024 compared to 10.3% in 2023.

Most telling of all, self-releasing artists (via distributors) grew their revenue by 4.7%, while their numbers expanded more than three and a half times faster than their revenue.

(Statistics from MIDiA Research’s Recorded Music Market Share 2024 report)

This suggests that the fastest-growing segment of the market is not the traditional label system but rather self-releasing artists and independent labels. And these are precisely the players being most adversely affected by royalty thresholds.

What Does This Mean Today?

The platforms implementing royalty thresholds are systematically carving out revenue streams from the very demographic that’s driving the most dynamic growth in the industry. When segments of a catalog fall below the threshold, they effectively cease to exist from a revenue standpoint, regardless of their cultural or creative value.

While some successful self-releasing artists and labels may not be affected in totality, individual tracks within their catalogs are being demonetized—even within otherwise "above threshold" albums.

The unspoken question remains: What happens when these thresholds continue to rise, deal after deal, renewal after renewal?

The Hard Truth About Music Licensing

Negotiating numbers, percentages, and calculation-based provisions is a manageable process. Metrics can be benchmarked and traded for something of equivalent value.

But when it comes to negotiating out an economic lever like the play threshold, that’s a different story. Once it’s embedded in licensing deals, removing it requires significant concessions or alternative mechanisms to compensate for perceived loss. As this becomes the standard ask to remedy a broken model, let’s call it what it is: the big carve out.

The Iceberg Principle: Your Plays In The Dark

While developing economic frameworks during my time at SoundCloud, I coined the "Iceberg Principle" as a means to illustrate ebb and flow dynamics. Reviewing global economics and managing monthly content cost evaluations, this principle became a straightforward way to illustrate how rightsholders and platforms are impacted by dilution factors, advertising revenue shifts, territory-specific dynamics, or fluctuations in a given area’s market share.

The threshold floor—or ceiling—is a contractually predetermined gate to monetization—a foreign economic lever imposed on organic market share dynamics. It’s designed to prevent dilution in theory.

But as dilution accelerates from multiple sources, thresholds will inevitably be redefined and raised. From a 1,000-play threshold to 10,000, 25,000, or higher.

The hard truth? More and more music will fall below the "water line" into non-monetization.

Picture your catalog, your label, or your body of work as an iceberg. The waterline symbolizes the royalty play count threshold—everything below it is rendered invisible from a revenue standpoint.

As years pass, as competitor growth from new technologies and fraudulent gaming of outdated systems intensifies, thresholds will be pushed higher and higher. The result? Increasing portions of catalogs submerge below the line of financial legitimacy.

Culture Exits

So what happens when culture is forced to exit mainstream music streaming platforms because it can’t generate revenue or value despite genuine engagement?

Culture will adapt. And while direct-to-fan options are emerging, the convenience of on-demand music remains a fundamental consumer need. But as platforms continue to raise thresholds, the accessibility and opportunity for emerging artists will continue to erode.

New Entrants

The introduction of play thresholds is a tacit acknowledgment that the streaming payout model is broken. But rather than addressing the core issue, the solution has been to add layers of ineligibility mechanics on top of an already fraying economic structure.

Instead of propping up a broken model, the industry should be pivoting towards user-centric frameworks that prioritize where actual attention is placed. SoundCloud launched its user-centric model in 2021, demonstrating that alternative models are not only feasible but essential.

New entrants like Vocana are setting up indie-only platforms that aim to build a "haven" market for emerging artists—one grounded in user-centric economics and social connectivity, designed to accommodate creativity rather than impose punitive economic gates.

Bandcamp, while long held as a favorite for independent artists due to its direct-to-fan commerce model and reliable download revenue, has never fully bridged the gap of offering on-demand streaming at scale. That gap remains open for new entrants with the foresight to provide both fairer economics and the convenience listeners expect.

The Closing Cut

The "Big Carve Out" isn’t inevitable. But if the industry wants to avoid it, it needs to confront the foundational flaws of its current model rather than continue shoring up a crumbling wall. Because the deeper truth here is this: systems designed to keep value out will ultimately keep creativity out. And a model that walls off creativity will ultimately sign its own death warrant.