Picture: Vlad
Spotify turned a blind eye to several important details in its much-hyped ‘royalty revamping’ strategy — including the illegal components. What else will explode?
On paper, everything seemed so easy. A well-conceived, 1,000-stream-per-year minimum threshold — and a fairer distribution of $40 million in funds that would have been locked down anyway. In fact, make that a billion dollars, according to Spotify’s five-year projections of the equitable distributions its ‘royalty revamping’ plan would generate.
Yes, this plan to reimagine streaming royalties was that good — and that helpful to the artist community.
However, it was also illegal, at least on the publishing side. It seems that the entire publishing side has strict royalty payment regulations under US Copyright Law (and the copyright laws of other countries), with little room to make things up. A 1,000-play limit might fly on the recording side, but withholding funds for publishing-specific licenses like mechanicals is against the law.
The issue surfaced in a bombshell DMN report earlier this month — with a showdown between Spotify and an army of litigants potentially next.
After word of Spotify’s royalty revamp started circulating, activist songwriter George Johnson quickly took up the matter with the Copyright Royalty Board (CRB).
“This deceptive scheme is clearly a way for Spotify to not pay nearly two-thirds of all American music copyright authors for their performances, reproductions, and distribution of their private works already licensed to Spotify,” Johnson fumed in a CRB filing.
Fast-forward to Tuesday of this week, and Spotify’s officially announced royalty revamp suddenly applies only to recordings — with words like ‘publishing’ and ‘songwriters’ not even mentioned.
“Starting in early 2024, tracks must have reached a minimum of 1,000 streams in the previous 12 months in order to generate recorded royalties,” the streaming giant clarified
Translation: Spotify won’t be paying for streams 1-999 on the recording side, but will still comply with statutory requirements on the publishing side. One payment will be held while under the limit, while the other will be automatically distributed to comply with separate laws.
Which means that instead of streamlining the royalty accounting process, Spotify has created a way to double the complexity. And keep the good times rolling in the accounting and legal departments.
Beyond that powerful pushback, however, the rebellion might be quelled.
Despite continued griping within indie, distribution, and artist rights corners, it’s unclear if Spotify will face any serious challenges ahead. In an email to Digital Music News, indie label organization Impala promised to discuss Spotify’s plan at its upcoming board meeting on November 30th. Outside of a broad promise of ‘ensuring a fair, diverse and sustainable music environment for all,’ the organization didn’t offer any concrete resolutions or demands.
And it’s uncertain if any will come. Part of the issue is that most serious artists, even no-name emerging artists,