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News March 17, 2019

Major players in the music industry are speaking up against Spotify’s tussle over songwriting royalties

Major players in the music industry are speaking up against Spotify’s tussle over songwriting royalties

Spotify is under fire from two publishing chiefs and its biggest rival.

It is over Spotify’s appeal – alongside Amazon, Google and Pandora – of the new statutory streaming rates announced by the US Copyright Royalty Board last January.

These would see streaming royalties paid to songwriters and publishers in the US rise from 10.5% to 15.1% of revenue.

The rate could also reach 44% by 2022.

Spotify says it can’t afford the greater royalties. Last September, the streaming service paid publishing royalties of nearly $21 million.

This makes up 13.35% of Spotify’s total revenue, or 24.9% of its payments to labels.

The National Music Publishers’ Association (NMPA) is fighting the moves by the digital companies, saying the new rate is fair and long overdue.

Sony/ATV chairman/CEO Martin Bandier responded, “I am incredibly disappointed that Spotify and the other companies have chosen to attack songwriters by appealing the long-overdue rate increases.

“The move flies in the face of everything that I have fought for on behalf of songwriters for fair-market rates.

“Songwriters are unquestionably the most important contributors to the success of the streaming services and deserve the benefits of the new rates that we worked so hard to achieve.”

Warner/Chappell co-chair Carianne Marshall called on songwriters to protest the appeal.

“We value our relationships with the companies who help us deliver music to fans, but we have to draw a line on this issue,” Marshall stated as part of a rallying call in an open letter.

“Their attempt to roll back rates fairly determined through the CRB process is unacceptable.

“As such, we will vigorously seek to protect the value of music and passionately promote the rights of songwriters.”

Apple, which is already fighting the rival’s attack on its 30% so-called apple tax, issued a statement:

“Underneath the rhetoric, Spotify’s aim is to make more money off others’ work.

“And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters.

“This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry.”

The tech and music industries now wait to see what the appeals court will do.

It will either ask the CRB to reconsider if the rate should be changed, it come up with its own calculations.

As reported in TMN, Spotify filed an official complaint against Apple’s “app tax” which charges a 30% commission on any app digital purchases on the App Store.

It called it a restriction of trade, one which would force it to pass costs to its customers.

Apple responded that Spotify grew its business on the Apple Store ecosystem for which it has not paid to build up 

“We’ve approved and distributed nearly 200 app updates on Spotify’s behalf, resulting in over 300 million downloaded copies of the Spotify app.

“The only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows.”

Apple noted that the majority of users of Spotify’s app are ad-funded, and therefore don’t pay anything in subscriptions – either to Spotify itself or to the App Store.

It added: “Apple connects Spotify to our users.

“We provide the platform by which users download and update their app.

“We share critical software development tools to support Spotify’s app building.

“And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions.

“Spotify is asking to keep all those benefits while also retaining 100% of the revenue.

“Spotify wouldn’t be the business they are today without the App Store ecosystem, but now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs.

“We think that’s wrong.”


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