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Recently, Spotify has reclassified its premium individual, duo and family subscription services as “bundled subscription services” in an ill-informed attempt to deprive songwriters and music publishers of their rightfully earned U.S. mechanical royalties. As a result, the agreed-upon revenue share rate for Spotify premium, currently 15.2%, may effectively be reduced to less than 12%, depending upon a number of factors. Losses to songwriters and publishers, estimated by Billboard to be $150 million on an annualized basis, will undoubtedly increase over time as subscription revenue and users grow.
Let me say straight away that this column is not intended to embarrass or disparage Spotify in any way. Quite the opposite: This is a respectful appeal to the company, specifically its senior leadership team, to do the right thing by songwriters, regardless of what strategies they appear to believe are legally permissible.
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Spotify has an unfortunate and documented history of punching down at songwriters and music publishers. In just the last few years, this includes appealing the Phonorecords III decision, which reasonably raised the mechanical royalty rate from 10.5% to 15.1% of revenue over a five-year period (while also providing discounted terms for family and student accounts that are beneficial to Spotify and other music services). Almost immediately after serving notice of its intention to appeal Phonorecords III, Spotify moved to retroactively implement the Copyright Royalty Board’s final pre-appeal decision and clawed back a multi-million-dollar credit from songwriters and music publishers throughout 2019. The appeal and remand process lasted for many years, ultimately delaying the payment of a large amount of mechanical royalties, including those earned during the hardship of the COVID-19 pandemic, until February 2024. And finally, in late 2021, Spotify proposed statutory rates for 2023-2027 that the NMPA referred to as the “lowest royalty rates in history.”
While the settlement of Phonorecords IV in 2022 was celebrated by both streaming services and music publishers, Spotify and other DSPs had especially good reason to rejoice. The settlement provides that revenue share rates minimally increase from the prior rate of 15.1% to 15.35% over a five-year period while also providing for discounts related to not only family and student accounts but also Spotify duo —subscription tiers that are meaningful to Spotify given the strong growth of family and duo plans, as the company has noted in earnings reports. The settlement also provides specific terms for DSPs that choose to bundle a qualifying music subscription service with other products and services.
It’s difficult to imagine why Spotify could have any degree of buyer’s remorse concerning the Phonorecords IV settlement or deliberately attempt to manipulate its terms given how clearly reasonable and fair it is. Spotify presumably entered into the settlement with the full knowledge and acceptance that it was agreeing to pay the revenue share rates of 15.1% to 15.35% upon a properly undiluted revenue base, as it had been doing until March 2024.
But Spotify has again devalued the contributions of songwriters to its platform, a move that has been described by rights and advocacy organizations as “cynical,” “potentially unlawful,” “greedy” and “offensive.”
I’ve been asked a lot in recent weeks why Spotify is doing this. The answer, other than perhaps “because they believe they can,” is simple. I believe that Spotify is unjustly attempting to reduce the amounts it pays to songwriters and music publishers in order to (1) effectively use the displaced royalties to offset the costs of running its audiobook business and (2) improve its margins.
Spotify’s reframing of the vast majority of its subscription services as bundled subscription services is a work of fiction. It has done so, in part, by launching a standalone audiobooks access tier that does not appear commercially attractive to users and was launched, at least to an extent, to support its “bundling” strategy. As noted in the Mechanical Licensing Collective’s (the MLC) legal complaint against Spotify, the audiobooks access tier is largely hidden from view on Spotify’s website on a page where the primary purpose is to steer subscribers to premium, not audiobooks access.
The audiobooks access tier is also only available in the United States, the only country to which the Phonorecords IV settlement and accompanying statutory framework applies, and is notably not available in any other country where audiobooks are available in premium. Spotify’s intent is rather obvious on its face, but to think that the availability of the audiobooks access tier as implemented is something of a silver bullet that qualifies it to reclassify its premium individual, family, and duo tiers as a bundled subscription service is a true mark of acting in bad faith. To do so when Spotify is reportedly on the cusp of rightfully raising prices in the United States is all the more insulting.
In the wake of the ire directed at Spotify from songwriters and the music publishing community in recent weeks, the company has issued statements to Billboard and other media.
First, Spotify has stated that it is simply doing what other services have done with bundled products. In my opinion, this is misleading. The Spotify competitors that have availed themselves of bundle reporting methods have done so for products that are bona fide bundles consisting of individually available services and products that hold a clear commercial value, and to which users actively elect to subscribe. Spotify has even done this itself for bundled products on a more limited basis, in the manner actually intended by the Phonorecords IV settlement and its predecessors. But as the MLC’s legal filing against Spotify notes, anyone who subscribed to Spotify premium prior to November 8, 2023, did not elect to receive audiobooks content or functionality. Many premium users have not utilized audiobooks even once; and, as of this writing, a non-student Spotify subscription without audiobooks does not even exist.
Spotify has also been quick to point out that music publishers “agreed to and celebrated” the Phonorecords IV settlement. I can assure readers there is no world in which the music publishing community truly believed that it was agreeing to bundling provisions in the manner in which they are being abused by Spotify to drastically reduce its payments to songwriters and music publishers. At minimum, Spotify’s actions clearly violate the spirit of the agreement, and to say otherwise is blatantly dishonest. To the extent Spotify may believe it has outsmarted songwriters and music publishers, there should be no pride in ownership.
Finally, Spotify has stated that it “paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024,” which presumably refers to Spotify’s global rather than U.S. domestic spend on music publishing royalties. This may be true given Spotify’s growth trajectory, which as of its most recent reporting was up 20% year-over-year in revenue and up 14% in premium subscribers. However, it is wholly irrelevant and a deflection from the issue. Simply paying more from one year to the next does not atone for the grave offense at hand. The amount of royalties paid is not the only pertinent metric.
Spotify has repeatedly stated its desire to become a more efficient and profitable company. I applaud that. Spotify operating profitably is good for the music business — including songwriters and music publishers. And Spotify is welcome to spread its wings and invest in new areas of business such as podcasts and audiobooks. But let’s be clear: The royalties that Spotify pays to songwriters and music publishers (and other music rightsholders including record labels) are not preventing it from becoming or remaining profitable.
Spotify has said on multiple occasions, including during its 2022 investor day presentation, that it has chosen to prioritize growth over profitability and has done so deliberately and willingly. Its music gross margin has operated at strong numbers and improved over time, in part thanks to its marketplace initiatives, but overall gross margin has been dragged down by investments the company has made in the podcast space. Not all of those investments, including content deals and acquisitions of other companies, have produced positive results, as is well documented in various media, and Spotify has since pivoted to operate more efficiently and better ensure that its costs do not grow quicker than its revenue.
The royalties Spotify pays to songwriters and music publishers are not the problem, nor are the royalties it pays to others. Spotify receives tremendous value in exchange for the mechanical and other royalties that it pays for musical works, and songwriters should not be treated by Spotify as a drag on its margins. To pay slightly north of 15% of revenue for songwriters’ creative output is a gift, and there is absolutely no reason for Spotify to sneak around corners to dilute songwriters’ income. It is beyond the pale, even relative to actions that Spotify has taken against songwriters and publishers in recent years.
I love Spotify and have been a user since the very beginning. But I value the songs upon which it has built its entire business even more. Spotify is a house built by songwriters. In the modern listening environment, which heavily depends upon personalization, recommendations and playlists, songs and songwriters are an even more crucial part of the infrastructure and the value conveyed to consumers who pay Spotify subscription fees.
I’ve often said that compensating songwriters in accordance with the value that they bring to music streaming platforms is not only good business but also good for business. Spotify’s relationship with songwriters and publishers, whether it realizes it or not, is mission-critical and not just about maintaining positive sentiment. Given the global stature of Spotify and the company’s interest in various content types including podcasts, music videos and lyrics, returning its relationship with songwriters and publishers to a respectful position is important to its future. Unfortunately, Spotify’s relationship with the songwriter and music publishing communities that it has built its business upon is now more fraught and damaged than ever. Trust has been almost entirely eroded. That cannot merely be chalked up to, as Spotify stated during its most recent earnings call, “natural tensions between suppliers and distributors.” But it may not be too late to fix things.
Here is my genuine and respectful appeal to Spotify, and it’s not a big ask: Please voluntarily honor the Phonorecords IV settlement on the intended terms that you know fully well were agreed to and promptly reverse course on your misguided attempts to reduce U.S. mechanical royalties in this manner. Songwriters and the broader music publishing community will thank you. If this is too much to ask, I believe the songwriting community will never want to hear another word from Spotify about, to use the company’s own words, “giving a million creative artists the opportunity to live off their art.”
Adam Parness was the global head of music publishing at Spotify from 2017 to 2019. He currently operates Adam Parness Music Consulting and serves as a highly trusted and sought after strategic advisor to numerous music rightsholders, notably in the music publishing space, as well as popular global brands, technology-based creative services companies and firms investing in music and technology.
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: Spotify faces a lawsuit over allegations that it “unlawfully” chose to reduce royalty payments to publishers and songwriters; Earth, Wind & Fire reaches a settlement over how much it’s owed in damages by an unauthorized tribute band; Elvis Presley’s granddaughter sues to protect Graceland from a “fraudulent” foreclosure; and much more.
THE BIG STORY: Spotify Taken To Court Over Royalties
Weeks after Billboard estimated that Spotify would pay roughly $150 million less to songwriters and publishers over the next year, the streaming giant is facing a legal battle over the move.In a lawsuit filed last week, the Mechanical Licensing Collective (MLC) claimed Spotify had “unilaterally and unlawfully” chosen to cut its royalty payments nearly in half by “erroneously recharacterizing” the nature of its streaming services to secure a lower rate.“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the MLC wrote. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”At issue in the lawsuit is Spotify’s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it’s now entitled to pay a discounted “bundled” royalty rate under federal law. But the MLC says Spotify’s interpretation is legally incorrect and represents a “clear breach” of its requirements under the law.This is the second lawsuit of the past six months for the MLC — an entity created by Congress in 2018 to collect royalties under the Music Modernization Act. After the MLC filed a similar case against Pandora in February, that streamer argued that the group was supposed to operate as a “neutral intermediary” and was “not authorized to play judge and jury” or pursue “legal frolics.”For the full breakdown of the new case against Spotify — including industry reactions and access to the full complaint filed in court — go read Kristin Robinson’s entire story here.
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Other top stories this week…
TRADEMARK TRIAL AVERTED – Earth, Wind & Fire reached a settlement with a tribute act that used the R&B group’s name without permission, avoiding a looming trial over how much the unauthorized group would have to pay in damages. The agreement came months after a federal judge ruled that the tribute act — “Earth, Wind & Fire Legacy Reunion” — had infringed the band’s trademarks.LIVE NATION CASE EXPLAINED – With an antitrust lawsuit against Live Nation from the U.S. Department of Justice expected soon, Billboard‘s Dave Brooks dove deep — breaking down the particulars of the looming case, explaining how it might affect Live Nation and recounting recent federal efforts to crack down on anti-competitive practices at tech giants like Google and Apple.COURTHOUSE ROCK – Elvis Presley’s granddaughter Riley Keough filed a lawsuit aimed at blocking a “fraudulent” foreclosure sale of the late singer’s historic Memphis home Graceland. Keough’s lawyers say the sale foreclosure was triggered by phony claims that her late mother, Lisa Marie Presley, borrowed $3.8 million and used Elvis’ famed mansion as collateral.UMG DROPPED FROM DIDDY CASE – Universal Music Group (UMG) and CEO Lucian Grainge were dismissed from a lawsuit claiming they “aided and abetted” Sean “Diddy” Combs in his alleged sexual abuse — a move that came after the lawyer who filed the case admitted there had been “no legal basis for the claims.” The sudden reversal came as UMG’s lawyers argued that the accusations were so “offensively false” that they planned to take the unusual step of seeking legal penalties directly against the accuser’s lawyer.SAMPLE SETTLEMENT – Kanye West reached a settlement with the estate of Donna Summer to resolve a copyright lawsuit that accused him of “shamelessly” using her 1977 hit “I Feel Love” without permission in his song “Good (Don’t Die).” The case, filed in February, claimed that West “arrogantly and unilaterally” used her music even though he had been explicitly refused a license.NAME GAMES – Members of the 1980s new wave band The Plimsouls won a legal ruling against the group’s guitarist over the trademark rights to the band’s name. The case was the music industry’s latest battle over the names of classic rock groups, including Journey, Stone Temple Pilots, Jefferson Starship, the Rascals, the Ebonys, The Commodores and The Platters.
The National Music Publishers’ Association (NMPA) has sent a letter to Judiciary Committee leadership in both the U.S. House of Representatives and Senate, asking for the overhaul of the statutory license in section 115 of the Copyright Act, which “prevents private negotiations in a free market” for mechanical royalty rates for songwriters and music publishers in the U.S.
On May 20, David Israelite, the organization’s president and CEO, teased this announcement in a guest column for Billboard, saying: “soon we will unveil a legislative proposal to permanently fix the power imbalance songwriters face by being subject to a compulsory license for their songs.”
In his new letter, NMPA’s Israelite writes that doing away with the 100-year-old system of government-regulated price setting for songwriter and publisher royalties (specifically, mechanical royalties) and allowing rate negotiations to occur in a free market would prevent songwriters and publishers from being taken advantage of by “Big Tech:” “Those who do operate in a free market, such as record labels, have negotiated protections against bad faith tactics. However, music publishers and songwriters have no such leverage under the [Copyright Royalty Board] to do so.”
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For years, music publishers and songwriters have lamented that they do not get to negotiate for their U.S. mechanical royalty rate privately because of wording in section 115 of the Copyright Act, which places “non dramatic musical works,” like songs, under a compulsory license, dating back to 1909. The rate for that license is determined by a set of Copyright Royalty Board judges, who weigh the interests of the music business against that of tech companies like Spotify, Apple Music, Amazon Music and more to determine what they feel is a fair price for music.
Record labels, which work with “sound recording” copyrights, not “musical works,” are able to freely negotiate their rates, as are music publishers and songwriters outside the U.S. Because of the discrepancy between how U.S. music publishers and songwriters are treated compared to others, publishers feel that they are held back from getting the best rates possible.
The letter arrives just a week after music publishers, the NMPA, and the Mechanical Licensing Collective (The MLC) — which collects and distributes mechanical royalties for U.S. publishers and songwriters — waged a war against Spotify for paying a lower U.S. mechanical royalty rate for premium, duo and family plans, starting in March 2024. Spotify believes that the addition of audiobooks to premium, duo and family plans qualifies these tiers as bundles, a type of subscription that pays a lower royalty rate.
For days after this information was first reported, various music organizations made statements against Spotify, often calling its reclassification “cynical” and a “loophole” to pay songwriters less and takes advantage of the settlement made between music publishers, songwriters and streamers to agree on a rate structure for 2023-2027 (known as “Phonorecords IV”), which was approved by the Copyright Royalty Board judges.
In the NMPA’s letter — addressed to Sen. Richard Durbin (D-Ill.), Sen. Lindsey Graham (R-SC), Rep. Jim Jordan (R-OH), and Rep. Jerrold Nadler (D-NY) — Israelite calls Spotify’s move a “manipulat[ion] [of] the compulsory licensing rules” and the latest in what he feels is the “continued abuse of the statutory system by digital services… [which] has made it clear that additional action by Congress is needed.”
On May 15, the NMPA sent a cease and desist letter to the streamer for hosting lyrics, music videos, and podcast content that contain their copyrighted musical works without a proper license. The next day, on May 16, The MLC joined in, filing a lawsuit against Spotify for “improperly” reclassifying its premium, duo and family plans and trying to get a discount, which would result in what Billboard estimates is a $150 million annualized reduction in U.S. mechanical royalties, compared to what they would have paid if these tiers never changed over.
In his new letter, NMPA’s Israelite proposes a solution for abolishing the current system, saying: “Congress should allow rightsholders the choice to license through the MLC using the statutorily set royalty rates or to withdraw from the MLC and operate in a free market if they meet certain conditions.”
He continues, “if copyright owners chose to withdraw their copyrights from the blanket license, currently administered by the MLC, they would be required to do the following:
Require all rightsholders who exercise this option to provide 6 months’ notice to the Register of Copyrights and the MLC;
Require that the withdrawing rightsholders ensure their musical work copyrights and ownership interests are registered in the MLC’s public database;
Require the MLC to flag those rightsholders and their catalogues as withdrawn from the MLC blanket license and subject to voluntary license negotiations; and
Require copyright holders to maintain with the MLC database current, up-to-date contact information, which would be used to contact for licensing.”
Read the full letter below:
Dear Chair Durbin, Ranking Member Graham, Chairman Jordan, and Ranking Member Nadler:
The Music Modernization Act (MMA) has offered not only songwriters and music publishers, but also digital service providers, unprecedented benefits. However, the bill has amplified the need for corrections to the century-old compulsory license governing their work.
Large, foreign-owned companies, like Spotify, should not enjoy unfair advantages over American songwriters because of outdated federal policy. By making one simple change, Congress can undo a more than 100-year-old mistake in the compulsory license and ensure songwriters and music creators continue to benefit from their creative efforts.
How did we get here? Almost six years ago, members of the House and Senate Judiciary Committees came together to pass the MMA, a landmark piece of copyright legislation for the age of digital music streaming. The MMA took important steps forward in improving the compulsory license imposed on songwriters and music publishers by creating the Mechanical Licensing Collective (MLC) to administer a blanket license under Section 115 of the Copyright Act, which is taken by digital music services.
The MLC increased transparency through a public database, furthered licensing efficiency through a central administrator, and improved the process for distributing musical work royalties. However, the benefits did not extend to, or remedy, the ongoing issues faced by rightsholders subject to the government rate-setting process.
The continued abuse of the statutory system by digital services, most recently Spotify, has made clear that additional action by Congress is needed. The royalty rates paid to musical work copyright owners for uses of those works under the Section 115 blanket license are set in a proceeding before the Copyright Royalty Board (CRB), within the Library of Congress, once every five years. In these proceedings, music publishers and songwriters must face off against some of the biggest tech companies in the world: Spotify, Apple, Amazon, Google, among others to establish rates for the use of musical works.
Because the law prevents private negotiations in a free market, publishers and songwriters have seen ongoing abuse of the statutory system and CRB rate-setting process with little ability for recourse. Most recently, Spotify has found a new way to game the statutory rate system to underpay rightsholders by hundreds of millions in royalties.
In March, Spotify began manipulating the compulsory licensing rules and reclassified its premium subscription music service, along with almost 50 million subscribers, into what it is calling a “bundle.” The benefit to taking this action is, under the compulsory royalty rates, bundles attribute less revenue – and therefore pay less in royalties – to the music than a premium subscription music service. Spotify has taken a part of its music service that was previously offered to consumers for free, audiobooks, and it is now calling audiobooks a bundle with its music service to substantially reduce the musical work royalties owed.
Those who do operate in a free market, such as record labels, have negotiated protections against these bad faith tactics. However, music publishers and songwriters have no such leverage under the CRB to do so.
Fortunately, there are solutions Congress can enact that would preserve the benefits of the MMA and the MLC while providing songwriters and publishers a better chance to compete on a level playing field with Big Tech firms like Spotify. Rather than picking who wins and who loses, Congress should allow rightsholders the choice to license through the MLC using the statutorily set royalty rates or to withdraw from the MLC and operate in a free market if they meet certain conditions.
If copyright owners chose to withdraw their copyrights from the blanket license, currently administered by the MLC, they would be required to do the following:
Require all rightsholders who exercise this option to provide 6 months’ notice to the Register of Copyrights and the MLC;
Require that the withdrawing rightsholders ensure their musical work copyrights and ownership interests are registered in the MLC’s public database;
Require the MLC to flag those rightsholders and their catalogues as withdrawn from the MLC blanket license and subject to voluntary license negotiations; and
Require copyright holders to maintain with the MLC database current, up-to-date contact information, which would be used to contact for licensing.
This would give rightsholders the option to stay within the current compulsory system or to operate within a free market. It would also restore basic principles of fairness to the market by requiring streaming platforms to deal with music makers as partners. Finally, it would provide a needed point of leverage for songwriters and music publishers to negotiate with streamers, like Spotify, who can otherwise use their power to bend government regulations to their advantage. All of this could be accomplished by building on the successful infrastructure created by the MMA and the MLC.”
Spotify has once again shocked the songwriting community by attempting to use a legal loophole to find a new way to pay them less.
Music creators had enjoyed a relative period of peace with Spotify since songwriters and music publishers struck a deal with digital services in 2022 to raise royalty rates over the next five years. Unfortunately, the streaming giant is now perverting that agreement by using audiobooks to redefine and reduce how much they pay songwriters – the tune of hundreds of millions of dollars. By unilaterally adding audiobooks to their premium music standalone service, they are now classifying that music service as a ‘bundle’ which means they can attempt to pay royalties under a different definition. In a single year this could cost songwriters an estimated $150 million.
Whether or not they can get away with this is still in question.
Record labels, who are in a free market, have immediate recourse against such underhanded tactics. They are not under a compulsory license like songwriters, and they have the freedom to negotiate directly with streaming services like Spotify. Crucially, this means if they don’t like the way their royalties are affected by Spotify’s bundling strategy, they can say no.
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Unfortunately, songwriters and music publishers cannot. They must go to court every five years and are at the mercy of three judges to interpret Spotify’s routing of the rules.
Spotify first aggressively came for songwriters in 2018. We had achieved a 44% raise in the headline rate for mechanical streaming royalties at the Copyright Royalty Board (CRB) – raising rates from 10.5% to 15.1% of revenue. In an unprecedented move, Spotify launched an appeal of that decision, sending us into a half-decade legal odyssey which ultimately resulted in the upholding of our headline rate increase as well as a few new changes.
Fast forward to 2022. Having lost their appeal in regard to the headline rate, the streaming services came to the table to negotiate the next five-year period.
To avoid repeating another era of uncertainty, and to ensure rates and terms improved, we agreed to a deal with Spotify, Amazon, Apple, Google, and Pandora to cover 2023-2027 which included a phased-in headline rate increase. Critically, it also included strengthening bundle definitions by ensuring that services were no longer able to attribute all parts of revenue to other non-music offerings in the bundle. However, the court prevented us from doing away with bundle definitions altogether because when a service pays under the bundle definition, they pay at a discount since music is only part of the offering.
Only recently, when reporting of royalties by Spotify sharply decreased in the middle of a CRB rate period, were we alerted to the fact that Spotify was reinterpreting the new bundle rules to manipulate their payments. However, calling Spotify’s premium service a bundle is dishonest.
After raising prices last year, there was great hope that Spotify would better align pricing with market value and songwriters would see the benefits resulting from the deal we agreed to in 2022 which ensures that when prices go up, so do their royalties.
Only in Spotify’s world would a price hike for users mean a lower royalty rate for songwriters.
As we look to the next CRB trial, where we will again face the largest tech companies in the world, we had hoped to approach it as business partners, bolstered by several years of collaboration. This development has shattered that potential as Spotify has returned to attacking the very songwriters who make its business possible – and worse, they’re doing it through a dishonest work-around.
Bundles were conceived to apply when two standalone products were combined to incentivize new users and grow the paying consumer base. What Spotify has done is act as if audiobooks are a new, separate service, when they are in fact the exact same premium streaming option to which millions of users are already subscribed.
In fact, in a bombshell last week, it was found that if you can even find where to sign up for the audiobook-only option, the first question Spotify asks you is who your favorite performing artists are – exactly like onboarding a music-only subscriber. It then offers you all of the music on its platform on-demand.
We will not stand for their misinterpretation of bundles as precisely defined in our settlement. If allowed to abuse the statutory formula in this way, it will pave the way for other services to do the same.
That’s why several serious actions are in process. Last week, the Mechanical Licensing Collective (MLC) sued Spotify for improperly reporting its usage – a.k.a. underpaying songwriters by labeling their services as a bundle.
As the MLC states in its complaint, “Spotify informs potential Audiobook Access subscribers that, unlike Premium subscribers, they will not have access to unlimited, ad-free, on-demand music. But in rolling out its Audiobooks Access plan, Spotify neglected to create a different product.”
Separately, NMPA also sent a demand letter to the streaming giant for its unlicensed use of musical works in its lyrics, videos, and podcasts. We also specifically warned Spotify about its rumored “remix” feature which would allow subscribers to “speed up, mash up, and otherwise edit” songs to create derivative works.
In addition to these legal challenges, soon we will unveil a legislative proposal to permanently fix the power imbalance songwriters face by being subject to a compulsory license for their songs.
Spotify’s cynical, and potentially unlawful, move should make all songwriters and artists question their relationship with the service. The strategy to rebrand music as a “bundle” further devalues their art and amounts to a complete betrayal.
David Israelite is the president and CEO of the National Music Publishers’ Association (NMPA). Founded in 1917, NMPA is the trade association representing all American music publishers and their songwriting partners.
In March, Spotify began paying music publishers and songwriters a discounted royalty rate for streams on its premium tiers — and the music business isn’t accepting the change without a fight. Spotify says that by adding audiobooks to its premium offerings, these subscriptions have been reclassified as “bundles,” a type of plan that qualifies for […]
The Mechanical Licensing Collective (the MLC) has filed a lawsuit against Spotify, calling the way the streamer reclassified its premium, duo and family plans as “bundles” and started paying a discounted royalty rate to publishers and songwriters “improper.”
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“The financial consequences… are enormous for songwriters and music publishers,” the MLC writes in the complaint.
News of the lawsuit arrives just a week after Billboard published its estimate that publishers and songwriters will earn about $150 million less in U.S. mechanicals in the next year, compared to what they would have been owed had the services not been bundled.
The root of the conflict started late last year when Spotify added 15 hours of free audiobook listening to Spotify premium, duo and family plans in the United States and other markets. At the time, this was a free extra for subscribers, and Spotify continued to pay the original full mechanical royalty rate for musical works in the United States.
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Starting in March, however, Spotify quietly launched an audiobook-only plan, then started to reclassify its premium, duo and family plans as bundles because audiobooks were included. According to Phonorecords IV, the agreement that dictates U.S. mechanical royalty rates for 2023-2027, bundles of multiple products are an inherently different type of subscription and thus use a different, lower royalty rate, given that multiple offerings must be paid for from the same subscription price.
In the lawsuit filed by the MLC, which processes and distributes mechanical royalties to publishers and songwriters in the United States, the organization argues “premium is exactly the same service” as it was previously. “Prior to March 1, Spotify paid mechanical royalties on the entirety of Premium revenues, subject to certain specific reductions identified in Section 115, despite the fact that Premium subscribers also had access to the same number of hours of audiobooks as Audiobooks Access subscribers now have,” the lawsuit reads.
“On March 1, 2024, without advance notice to the MLC, Spotify unilaterally and unlawfully decided to reduce the Service Provider Revenue reported to the MLC for Premium by almost 50 percent,” reads the complaint. “[This was done] by improperly characterizing the service as a different type of subscription offering and underpaying royalties, even though there has been no change to the premium plan and no corresponding reduction to the revenues that Spotify generates from its tens of millions of Premium subscribers.”
Spotify provided a statement to Billboard in response to the lawsuit, saying: “The lawsuit concerns terms that publishers and streaming services agreed to and celebrated years ago under the Phono IV agreement. Bundles were a critical component of that settlement, and multiple DSPs include bundles as part of their mix of subscription offerings. Spotify paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024. We look forward to a swift resolution of this matter.”
Reports of Spotify’s change to its royalty rate structure for premium, duo and family plans first arrived in April. Immediately, the National Music Publishers’ Association (NMPA) began speaking out against Spotify’s reclassification, calling it an “end to our period of relative peace” and “potentially unlawful.”
On Wednesday (May 15), the NMPA sent Spotify a cease and desist letter regarding a separate issue: allegedly unlicensed lyrics and video. In the letter, NMPA general counsel/executive vp Danielle Aguirre also mentioned there might be some publishing content that “will soon become unlicensed” by its members. Spotify fired back at the letter in a statement, which read: “This letter is a press stunt filled with false and misleading claims.”
In its lawsuit filed Thursday, the MLC claims that to qualify for the bundle subscription rate, “an offering must include at least two distinct products or services. Premium does not,” adding, “Premium already consisted of unlimited music and access to other audio products including up to 15 hours of audiobook listening” as well as other offerings like podcasts.
The MLC further argues that the audiobook-only plan Spotify launched in March is not a different product, saying that it offers more than just audiobooks. “New Audiobooks Access subscribers are being granted access to 15 hours of audiobooks listening and the same access to unlimited, ad-free, on-demand music that Premium subscribers are provided. The only difference is that subscribers to Audiobooks Access are paying $9.99 per month, rather than $10.99, to receive the same product,” reads the complaint.
The MLC also notes that the “audiobook access subscription page does not appear to be directly accessible from Spotify’s website” — making the point that the offering is difficult to find. As a consequence, the MLC says it believes “there is little doubt that the number of subscribers who will sign up for Audiobooks Access is likely to be a fraction of the Premium subscribers.”
A few months ago, the MLC also sued Pandora, another streaming service it collects mechanical royalties from in the United States, for what it says is a failure to properly pay streaming royalties. That lawsuit is ongoing.
The MLC and the Digital Licensee Coordinator (DLC) — the organization intended to represent the majority interests of digital music providers affected by the blanket license set up by the Music Modernization Act (MMA) — are also currently in the process of their first five-year check-up (called a “re-designation” process) to ensure both are effectively fulfilling their duties. This routine, five-year check, conducted by the U.S. Copyright Office, allows the two organizations to self-report on their progress and gives key stakeholders — including the Digital Media Organization (DiMA) — the opportunity to speak to the strengths and weaknesses of the organizations.
The MLC’s operational costs are paid for by DiMA members, including Spotify, Pandora, Apple Music, Amazon Music and more, as set forth by the Music Modernization Act (MMA). In a blog post in March, DiMA’s CEO/president, Graham Davies, pointed out that the MLC is “suing one of the licensees [Pandora] that pays its costs.” The NMPA replied to this post by defending the MLC, saying that streamers “do not want what is in the best interests of music publishers or songwriters,” calling DiMA’s “new…strategy…an effort by the world’s largest digital companies to leverage their power to pay less.”
The NMPA’s president/CEO David Israelite provided a statement of support for the MLC lawsuit, saying, “we applaud the MLC for standing up for songwriters and not letting Spotify get away with its latest trick to underpay creators. The MLC is tasked with challenging services who falsely report royalties, and we commend their swift action. The lawsuit sends a clear message that platforms cannot improperly manipulate usage — in this case unilaterally redefining services as a bundle — in order to devalue music. We strongly support the MLC and will continue to pursue justice.”
The National Music Publishers Association (NMPA) has sent a cease and desist letter to Spotify for allegedly hosting lyrics, music videos and podcast content that contain their members’ copyrighted musical works without proper licenses. The organization, which represents music publishers in the U.S., says that it “demands” that these alleged unlicensed works “be removed from the platform or Spotify will face copyright liability for continued use of these works.”
The letter comes a week after Billboard released an estimate, claiming that Spotify will pay about $150 million less in U.S. mechanical royalties to music publishers and songwriters in the next year than what publishers and songwriters were previously expecting. This is because Spotify added audiobooks into its premium, family and duo plans, and the company claims that the move now qualifies them as a bundle, which pays a discounted royalty rate from normal standalone subscriptions, given Spotify now has to pay for books and music from the same subscription price.
The cease and desist letter, obtained by Billboard, covers a separate issue to last week’s announcement, but the timing suggests the NMPA is hoping to push back against Spotify’s practices on several fronts. The letter continues: “Spotify appears to be engaged in direct infringement by hosting unlicensed musical works in its lyrics, videos and podcasts and by distributing unauthorized reproductions, synchronizations, displays and derivative sues of these musical works to its users. Making matters worse, Spotify profits from such infringement.”
Trending on Billboard
Written by NMPA’s executive vp and general counsel Danielle Aguirre, the letter did not cite any specific unlicensed works or say how many instances there are of unlicensed works on Spotify and warned about both unlicensed works as well as works that “will soon become unlicensed” by its members. When asked for a list or a ballpark number of the unlicensed works, NMPA declined to comment. If the NMPA ever gets to the point of filing a lawsuit against Spotify for these alleged offenses, however, the organization would then provide more detail.
Many music publishers currently have licenses in place with Spotify for their lyrics and video content. Unlike the government-regulated process of setting U.S. mechanical royalty rates, lyric and video licenses are direct deals between the publisher and the streaming service, and each negotiation is unique, but for lyrics specifically, some publishers will license through third party aggregators like Lyric Find. These deals are not considered to be major money makers for publishers or streamers, and although their duration can vary, the licenses typically run for 1-2 years, according to a source close to the matter.
The NMPA also cites a recent Wall Street Journal article that claimed Spotify is working on tools that would allow subscribers to “speed up, mash up and otherwise edit songs from their favorite artists” in its letter to Spotify, warning the streaming platform that if “any such feature” is released by Spotify “without the proper licenses in place from our members” it “may constitute additional direct infringement.”
Spotify and the NMPA have a history of not getting along, but since late 2022, it appeared the two were on relatively good terms. After a contentious five years of back-and-forth over how to set the U.S. mechanical royalty rate for streaming for 2018-2022, the NMPA, Nashville Songwriters Association International (NSAI) and streaming services, like Spotify, came together to collectively settle the next rate period together (2023-2027), hoping to avoid another lengthy and costly fight. The result was something David Israelite, president and CEO of the NMPA, touted at the time as the “highest streaming rates in the history of digital streaming,” due to a raise in the headline rate.
Part of the compromise for that settlement, however, included an update to how bundles were treated, which was considered a potential benefit to streaming services. As the Association of Independent Music Publishers (AIMP) put it in their statement against Spotify’s bundling practices, music publishers believe Spotify used a “loophole” to “circumvent the [Copyright Royalty Board] settlement.” Israelite went further, calling the bundle reclassification a “potentially unlawful move” when it was first announced, even though Spotify believes it rightfully qualifies. Recently, the NMPA admitted a lawsuit against Spotify for bundling was “likely.”
Read the full letter below:
Dear Mr. Kaefer [vp and global head, music and audiobook business] and Ms. Konstan [general counsel of Spotify]:
I write on behalf of the National Music Publishers’ Association (“NMPA”) regarding copyright infringement of our members’ musical works on the Spotify platform. As the voice of our members, NMPA protects, promotes, and advances the interests of music creators and enforces the rights of publishers, and their songwriter partners, who own and/or control musical work copyrights.
Music is essential to Spotify’s service; it is the reason subscribers utilize the Spotify platform every day. Spotify’s primary use of musical works via interactive streams and downloads is subject to the antiquated compulsory license under 17 U.S.C. § 115 and consent decree-governed public performance licenses.
Regardless of the mechanical and public performance licenses Spotify may have, however, the use of lyrics and music in videos and podcasts on its platform requires rights that must be negotiated directly with rightsholders in a free market.
It has come to our attention that Spotify displays lyrics and reproduces and distributes music videos and podcasts using musical works without the consent of or compensation to the respective publishers and/or administrators (our members) who control the copyrights in the musical compositions. As such, these uses of musical works on the Spotify platform are not licensed or will soon become unlicensed.
U.S. copyright law generally grants copyright owners the exclusive right to, among other things, reproduce, distribute, display, perform publicly, and create derivative works from their copyrighted works under 17 U.S.C. § 106. Violation of these exclusive rights constitutes copyright infringement under 17 U.S.C. § 501.
Spotify thus appears to be engaged in direct infringement by hosting unlicensed musical works in its lyrics, videos, and podcasts, and by distributing unauthorized reproductions, synchronizations, displays, and derivative uses of these musical works to its users. Making matters worse, Spotify profits from such infringement.
Accordingly, on behalf of our members, NMPA demands that unlicensed lyrics, music videos, and podcasts be removed from the platform or Spotify will face copyright liability for continued use of these works.
We also understand that Spotify wishes to offer a “remix” feature allowing Spotify subscribers to “speed up, mash up, and otherwise edit” their favorite songs to create derivative works. Spotify is on notice that release of any such feature without the proper licenses in place from our members may constitute additional direct infringement.
NMPA further demands that Spotify preserve all electronically stored information (“ESI”), as defined by Rule 34 of the Federal Rules of Civil Procedure, along with any paper files, in Spotify’s possession, custody, or control that is relevant to use of our members’ unlicensed works. Spotify must also cease any auto-deletion operations affecting ESI relevant to this matter.
This letter is not intended as a full recitation of the facts or claims that may be made against Spotify by NMPA, its members, and/or other copyright owners, and is made without prejudice to all rights or remedies against Spotify and all others acting in concert with Spotify, including without limitation, monetary damages and attorneys’ fees as provided under 17 U.S.C. §§ 502-505.
Sincerely,
Danielle Aguierre
In Spotify‘s latest Billions Club: The Series episode Tuesday (May 14), Cardi B feasts on some delicious Caribbean food while enjoying a few major streaming milestones on the side.
To celebrate having four songs on the platform surpass a billion plays, the rapper ate a meal of oxtails, rice and plantains while using her quartet of shiny new Spotify plaques as plates. In between bites, she opened up about making each track, starting with her 2018 feature on Maroon 5’s “Girls Like You.”
“This song is the perfect song to dedicate [to] my child,” she says in the clip while wearing a pink bathrobe and slippers. “Like, my daughter was in me when I did this song. When I perform this song, it touches me a little different.”
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Cardi’s first child — a daughter named Kulture Kiari, whom she shares with Offset along with son Wave — was born in July 2018, less than two months after her collaboration with Maroon 5 dropped. The New York native also released “I Like It” with Bad Bunny and J Balvin while she was expecting her baby girl, not that she gave the two Latin music stars a heads-up about her pregnancy before meeting them for the first time.
“They just looked down at my stomach like, ‘Oh!’” Cardi recalled, laughing.
“I went to my Grandma’s house, and I played it to everybody like, ‘I have a song with Bad Bunny and f–kin’ J Balvin! Oh my god!” the musician added. “The three of us, we were coming up at the same time.”
Cardi also celebrated her collaboration with Ozuna, Selena Gomez and DJ Snake, “Taki Taki,” reaching a billion streams, clarifying that the song’s title has nothing to do with the popular spicy chip of the same name. “It’s just a word Ozuna made up,” she said with her usual hilarious candor. “I don’t freaking know.”
And of her “WAP” duet with Megan Thee Stallion, Cardi said that their two voices “just went perfect” together. “It meshed very well, like butter and f–king bread,” she continued. “It became such a political record, which kinda shocked me and kinda shocked Megan. The song is not that freaky.”
Three of Cardi’s four Billions Club entries reached No. 1 on the Billboard Hot 100 following their respective releases, with “Girls Like You” reigning atop the chart for a whopping seven weeks back in 2018. “Taki Taki” reached No. 11 on the listing that same year.
“I just want to say thank you to my fans because sometimes I can be a little bit hard on myself … I never feel satisfied,” the Whipshots founder said to close out the episode. “The goal is never going to be reached because I’m always hungry for more.”
Watch Cardi’s new Spotify Billions Club episode below.
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Not long after Artist Partner Group (APG) signed Odetari — who specializes in glitchy, racing electronic tracks — last year, the label set up a second Spotify profile for him. Odetari “frequently has two to three different versions of records coming out a month,” explains Corey Calder, svp of marketing and creative services at APG. “If we were to have that all sit on his page, it would feel cluttered and make it hard for his fanbase to follow and track it all.”
This means that “HYPNOTIC DATA – Slowed & Reverbed” and “GMFU – Sped Up” live on a Spotify page called ODECORE, while the original hits will be found by anyone scrolling through Odetari’s own Spotify profile. And this split artist identity is part of a growing trend where acts keep one Spotify account for “official” releases, plus a side account for alternate versions.
Odetari’s labelmate 6arelyhuman puts remixes on Spotify under the name Sassy Scene. A Spotify account named Mei Mei The Bunny has only uploaded sped-up versions of Laufey singles, four to date. Mark Ambor has a breakout hit in “Belong Together;” his team uploaded the sped-up remix to Spotify through a separate account titled Lucky Socks.
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Even just a few years ago, creating alternate Spotify accounts for alternate versions of hit singles would’ve seemed wildly unnecessary. But user remixes and edits have proliferated and become popular soundtracks on short-form video platforms like TikTok.
Listeners often don’t care whether the “slowed and reverbed” sound they find on streaming is an official version generating income for the artist they like or a random upload — they just want to play the track that’s stuck in their head. As a result, labels adjusted by starting to release their own alternate reworks to satisfy this portion of the population. If they’re going to stream “Belong Together (Sped Up)” anyway, it might as well be a version that makes money for Ambor.
The streaming service Audiomack found that uploads of “manipulated songs” by labels — official tracks sped and slowed, pitched up and down, muffled and reverbed — shot up at the end of 2022. The number of these releases has continued to rise rapidly ever since, climbing from under 1,000 a quarter to around 6,000 a quarter.
These remixes can thrive in their own streaming ecosystems. Universal Music Group launched a Spotify account called Speed Radio that only posted sped-up versions of label releases; sped up nightcore did the same for singles from Warner Music Group.
The goal was “to create another mechanism for growth and a new algorithmic pocket on streaming services that helps increase visibility and discovery,” says Nima Nasseri, a former UMG executive whose role involved helping the company market user-generated remixes. As these Spotify pages amassed followers who enjoyed sped-up audio, they allowed new remixes to reach a larger audience by standing on the shoulders of their predecessors.
Some remix-focused side accounts exhibit clear links back to the mothership in a way that also helps drive awareness of the main artist project — ODECORE and Sassy Scene songs usually credit Odetari and 6rarelyhuman, respectively, as collaborators. Some of these alter-ego accounts, like Lucky Socks, maintain a degree of anonymity.
But both cater to a demand: Anyone searching Spotify for a sped-up version of 6rarelyhuman’s “Faster n Harder” finds the Sassy Scene version first. 6rarelyhuman picks up plays (and royalties) that might otherwise have been steered towards an entrepreneurial cover artist.
ODECORE has an additional function, according to Calder: Eventually, the goal is to turn it into a “sub-label” featuring music from artists signed to Odetari. “Ideally we’ll have a built-in audience already,” Calder says. ODECORE currently has more than 430,000 followers on Spotify, according to Chartmetric; that group functions as a potential launching pad to help Odetari’s future signings reach a wider listenership.
“A lot of what we do internally at APG is create multiple profiles for artists across social channels, and we’ll run fan pages in-house for our artists,” Calder continues. “We have these secondary and tertiary brands that are always on in the background. And so we just applied that same thinking to a Spotify profile.”
At the moment, the primary downside to releasing remixes under an alter ego is that they don’t count towards the success of the original on the Billboard charts. If artists put out a remix under their own name, consumption of that new version also counts towards chart position (generally, as long this happens within 18 months of the original track’s release and the original is still a “current” on the charts). That’s why stars often put out remixes with big names attached when they’re in tight races for the top spot on the Hot 100. But if Ambor’s alternate version of “Belong Together” is attributed to Lucky Socks, he gets no help from the extra consumption.
Ben Klein, president of Ambor’s label, Hundred Days Records, acknowledges that “commercially, it makes a lot more sense” to put out remixes under the same artist project. But Ambor is not competing for No. 1 — at least not yet, as the song has only reached No. 84 on the Hot 100 — and the team chose to release “Belong Together (Sped Up)” under a goofy alternate name anyway.
“We actually took inspiration from the Laufey team when we came up with the idea,” Klein says. “When Mark thinks about his profile, he wants it to be a representation of his music. A sped-up version is meant to be a fun, playful way for people to engage with the song on social media. It’s not a direct connection to his artistry. And I think he just wanted to keep it separate for that reason.”
Calder believes “a lot more new artists” will take a similar approach in the future. As streaming platforms try to capitalize on the homemade remix eruption by adding their own audio manipulation tools, it’s easy to imagine artists encouraging fans to mess with their songs by saying that the most popular fan edit will be posted to an official artist account. Just not the official artist account.
Spotify is changing the way it pays songwriters and publishers in the United States — leading to an estimated $150 million cut to U.S. mechanical royalty payments — and the music business is speaking out.
By adding audiobooks into Spotify’s premium, duo and family tiers, Spotify now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams given that it now has to pay licensing for both books and music from the same subscription price tag — which will only be a dollar higher than when music was the only offering.
Spotify argues that adding audiobooks reclassifies the service from a “standalone portable subscription” to a “bundled subscription offering,” according to the royalty rate formula provided in Phonorecords IV. The National Music Publishers Association (NMPA) and Nashville Songwriters Association International (NSAI), both of which represented the music business in Phono IV proceedings, disagree with Spotify’s reading of the settlement, with the NMPA calling it “a cynical and potentially unlawful move” that is a “perversion of the settlement we agreed upon in 2022.”
Trending on Billboard
Last week, Billboard calculated that this change will lead to an estimated $150 million cut in U.S. mechanical royalties from premium, duo and family plans for the first 12 months the bundle rate is in effect, compared to what songwriters would have earned if the three subscription tiers were never bundled. The change affects payments starting in March 2024, so it will not impact Spotify’s premium, duo or family payouts for the first two months of 2024. Specifically, the estimate refers to losses for the first 12 months after the premium, family and duo tiers are qualified as a bundle, not calendar year 2024.
As Spotify grows, the music business fears that the difference between what payments to songwriters and publishers would have been if premium continued to be counted as a regular standalone service versus what will be paid now that music and audiobooks have been bundled will continue to increase.
Spotify says it will soon offer a music-only subscription tier that will pay out in the same way Spotify premium used to, but there’s not yet a timeline for when this option will launch.
Back in March, Spotify released a statement about the change to the bundle rate, stating that the company is “on track to pay publishers and societies more in 2024 than in 2023. As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.”
Below is an updating list of music industry reactions to the news:
National Music Publishers’ Association (NMPA)
“It appears Spotify has returned to attacking the very songwriters who make its business possible. Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace. We will not stand for their perversion of the settlement we agreed upon in 2022 and are looking at all options.”
Association of Independent Music Publishers (AIMP)
“Two weeks ago, we spoke out about the potential consequences for independent music publishers should Spotify go forward with its plan to bundle a previously free service, audiobooks, with music subscriptions. Now that an actual number has been put to the potential lost revenue for music publishers, a staggering estimate of $150 million per year, we feel the need to speak out again.
“It is a deeply cynical move for Spotify to attempt to circumvent the CRB settlement agreed to by the NMPA & NSAI and DiMA in 2022 via this bundling ‘loophole,’ and further insulting that the price of a Spotify subscription will actually increase for users while cutting revenue for the songwriters who keep their business alive. This is especially problematic for independent music publishers, as they and all publishers are legally prevented from negotiating protections against bad-faith tactics such as this, while labels are allowed to do so in a free market.
“At this point, we still do not know how Spotify plans to notify its subscribers of this change. The right thing to do is to default existing subscribers to music-only accounts, and then give them the option to add-on the audiobook service for an additional $9.99 per month — Spotify’s proposed standalone rate for audiobooks. This ensures a proper, non-devalued royalty rate for both music and audiobook publishers and rightsholders, who will otherwise both be negatively affected by bundling.
“The AIMP offers its unequivocal support to the NMPA as they fight this critical battle to prevent Spotify’s scheme from taking effect. We encourage all independent music publishers to join us in this stance and make their songwriters aware of this attack on their livelihood. We cannot allow bundling to become a precedent that can be used to deprive songwriters of their well-earned royalties.
“The AIMP has also been speaking with the Coalition of Concerned Creators and are happy to report that we are aligned on this issue. Please find their statement on this issue below.
“From the Coalition of Concerned Creators:
“All musicians, creator advocacy groups, unions and organizations, and other creator stakeholders — including authors and podcasters — must stand firm against Spotify’s recent policy shift. It is essential to advocate for equitable compensation for music creators, who are pivotal to the industry’s sustainability. Additionally, this is a clear pattern of behavior and we continue to be concerned about Spotify’s bridge into new audio formats, like audiobooks, and how this pattern of behavior will affect other creators, like authors, as well.”
Nashville Songwriters Association International (NSAI)
“Spotify, we are writing regarding Spotify’s decision to ‘bundle’ music with audiobooks, resulting in an estimated annual loss of as much as $150 million in mechanical royalty payments to American songwriters, composers and music publishers. This attempt at lowering royalty payments to an already beleaguered songwriter community is in the worst bad faith and a perversion of the Copyright Royalty Board settlement that the Nashville Songwriters Association International (NSAI), the National Music Publishers Assn. (NMPA) and the Digital Media Assn. (DiMA) agreed to in 2022. It counters every statement Spotify has ever made of claiming the company is friendly to creators.
“‘Bundling’ music with other offerings without a music-only option does not comport with our view of the intent of the Copyright Royalty Board (CRB) in recent Phonorecord procedures in which the NSAI participated. Further, this move negates gains awarded to songwriters by the CRB. NSAI will not accept what we view as an attempt to manipulate the intent of the court through a ‘bundling’ gimmick. NSAI calls for Spotify to immediately reverse its course and offer separate music subscription choices at price points that will fairly remunerate songwriters.
“The American songwriter community is appalled that this is happening while Spotify is reporting record profits, and while founder Daniel Ek has recently cashed in a reported $180 million in stock options, including $118 million that practically coincided with the ‘bundling’ announcement which reduced Spotify’s yearly royalty obligation. The amount Ek cashed in conveniently mirrors the estimated amount that Spotify wants to leech off the back of songwriters who create the product on which streaming services are making billions.
“Reporting record profits while reducing songwriter royalties as the company founder cashed in millions in stocks proves a greedy, offensive and callous disregard for the songwriters on whose backs these revenues are generated.
“Signed unanimously by Nashville Songwriters Association International”