4 of the top 5 music streaming service providers argued a ruling from the Copyright Royalty Board (CRB) which was planning to increase streaming payouts to songwriters by over 40%. Those streaming services are Spotify, Amazon, Google, and Pandora. Apple has publicly rejected any legal action against songwriters.
Spotify and Amazon have been painted as “bad actors” in this situation by David Israelite, President & CEO of the National Music Publishers Association (NMPA). He also commented; “I can promise you that no one in the songwriting community is going to believe that Spotify cares, at all, about songwriters after taking this action.” Israelite and his colleagues were instrumental (no pun intended) in the passing of the Music Modernization Act which put producers and engineers in U.S. Federal law for the first time.
Justin Traner, a world-famous songwriter who was worked with Ariana Grande, Fall Out Boy, and Gwen Stefani, tweet: “For the first time in 110 years songwriters get an increase in royalties based on how much the music business has changed in that time, and this is how tech companies react. Wow.” His tweet is especially interesting because he is acknowledging what these companies really are: tech companies, Apple has been in the music business for a long time and seem to be the only ones to understand that this proposed ruling would be good for artists, thus good for Apple Music. The others clearly do not see it that way.
Spotify has since come out in defense of their appeal and claim that their main point of contention is with how the CRB is structuring the payout: “We are supportive of U.S. effective rates rising to 15% between now and 2022 provided they cover the right scope of publishing rights. But the CRB’s 15% rate doesn’t account for all these rights. For example, it doesn’t consider the cost of rights for videos and lyrics.”
Spotify argues that this ruling would restrict streaming services from delivering different offerings, like video, to consumers and would reduce the amount opportunities for artists, songwriters, and others in the music industry. Their blog post states: “A key area of focus in our appeal will be the fact that the CRB’s decision makes it very difficult for music services to offer “bundles” of music and non-music offerings. This will hurt consumers who will lose access to them. These bundles are key to attracting first-time music subscribers so we can keep growing the revenue pie for everyone.”
The fairness, and validity, of this claim depends on who you ask. David Israelite said this regarding Spotify’s response: “Wow. 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. They must think artists and songwriters are stupid. They are not.”
We will see how this plays out and for now, it is not looking good for Spotify and their competing streaming companies (except Apple).