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News March 9, 2016

Spotify to settle with NMPA over royalties?

Former Editor

The National Music Publishers’ Association, the US representative of publishers and songwriters, is apparentlyundergoing settlement agreement negotiationswith streaming giant Spotify.

That’s according to Digital Music News, which reported the NMPA is among “a number” of US-based publishers readying settlements with Spotify over mechanical copyright licenses.

The NMPA’s CEODavid Israelite told DMN: “NMPA has been engaged in negotiations over the failure by several digital music services to license and pay songwriters and music publishers appropriately.

“I am hopeful that we can reach a just settlement that provides a framework for moving forward as business partners – as it should be.”

It should be noted here that Spotify employs the Harry Fox Agency to administer mechanical rights, however the service has long maintained that some content creators aren’t lodging accurate data on song ownership.

According to confidential details shared with DMN, the settlement agreement calls for Spotify to create a platform where publishers and songwriterscan pairtheir recordings with their publishing rights.

DMN reported the settlement also calls for unreleased and unpaid mechanical licensing funds to be remitted and divided among NMPA members, based on total market share. It’s believed that any past copyright infringement claims would then be forfeited in exchange for collecting on this settlement.

It also calls for Spotify to be assessed aone-time penalty in the order ofUS$5 million. This penalty is on top of the reported US$16 to 25 million in back royalties that it owes publishers and songwriters.

Industry whispers are that Universal Music Publishing GroupandSony/ATV have signed onto the pact but that the deal is yet to be signed.

Regardless of whether an update to Spotify’s systems receives a green light, should the service be found guilty of copyright infringementby the US courts, it will likelyspark a chain reaction for other digital services who usedpayment models initially designed to track physical sales and not the intricacyofdigital music streaming.

In fact, US music streaming company Rhapsody (which operates outside the US as Napster, which it bought four years ago), was this week served a class action complaint. FiledbyDavid Lowery and three others (Lowery filed a US$150m suit against Spotify in December) Rhapsodyis being served over non-payment on mechanical royalties for unlicensed works in their catalogue.

The news follows an out-of-court settlement between publisher Yesh Music and Microsoft. Similarly to Yesh’s suit against Microsoft, the publisher is also taking legal action against Google and Tidal for unpaid publishing royalties. Each suit centres around the fact Yesh’s digital distributor TuneCoreonly licenses the master recording portion of a song, not the mechanical licenses. Yesh maintained Microsoft failed to obtain a mechanical license before making its artists’ recordings available for temporary stream or permanent download.


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