Spotify’s public clash with songwriters over royalties gets ugly

Spotify’s clash with US songwriters has turned ugly, with a number of executives including the heads of the National Music Publishers Association and Songwriters of North America accusing the streaming service of lying.

Spotify, along with Amazon, Google and Pandora have appealed a recent decision by the Copyright Royalty Board (CRB) which would see streaming mechanical royalties grow by at least 44% in the US and effective between 2018 and 2022.

Earlier this week, Spotify posted a blog attempting to rationalise its appeal.

It agreed “songwriters deserve to be paid more,” but claimed it has an issue with “flaws” in the CRB’s rate structure.

Its argument is that while the CRB has increased mechanical royalty rates on streaming services from 10.5% to 15.1%, the rates fail to cover the “right scope of publishing rights,” including those for video and lyrics – which it says will make it harder to offer the kinds of non-music “bundles” that help attract new subscribers and retain existing ones.

David Israelite, CEO and president of the National Music Publishers Association responded: “I didn’t think Spotify could sink much lower — but they have.

“This statement is one giant lie. I’m sure a PR team spent a great deal of time and energy crafting a statement to try to deceive artists and songwriters.”

Entertainment lawyer and creators rights activist Dina LaPolt, who set up Songwriters of North America, called the blog fake news and straight up lies.

Publishers and songwriters groups say that CRB rise does not cover video or lyric content, which are being negotiated separately in the US.

They also argue that the streaming services are appealing to reduce or eliminate the royalty rate – not clarifying the rate.

Music Business Worldwide set out how much money is at stake.

In 2018, the US streaming royalty payout on Spotify’s total US revenues (ie. 11.4% of $2.33 billion) would have been $265.6 million.

In 2019 (ie. 12.3% of $2.33 billion) it would be $286.6 million, in 2020 (13.3%) it would be $309.9 million, in 2021 (14.2%), it would be $330.9 million and in 2022 (15.1%), it would be $351.8 million.