Spotify remains the lightning rod for criticism about artist and songwriter royalties from streaming, so it’s interesting to see the company building bridges with the creator community today through talks with the Fair Trade Music coalition.
Not least because this is not the kind of tech industry body – espousing “fair” royalties for creators while (according to critics) lobbying for the opposite – that has been coming under fire in the US recently. It’s an organisation endorsed by a number of songwriter and composer bodies, including the Songwriters Guild of America (SGA) and Songwriters Association of Canada (SAC).
“We are delighted Spotify is the first major service to reach out to us to engage in this vital discussion and initiative,” said the SAC’s Eddie Schwartz. “It’s encouraging to see a service as large as Spotify recognise our interdependence,” added the SGA’s Rick Carnes.
The talks are encouraging at a time when the question of songwriter streaming royalties is being debated loudly. Spotify has clearly realised the need to engage more directly with songwriters and the publishing community – something also shown in its recent shift of senior licensing exec James Duffett-Smith to a new position as global head of publisher relations.
“Songwriters are the heart of the music industry and we welcome our relationship with Fair Trade Music,” he said as the talks were announced. “We’re looking forward to working in partnership with the songwriting community to help build a transparent and sustainable future for the entire music business.”
However, talks are one thing and action another: with some labels digging in their heels over ceding any share of streaming royalties to publishers, figuring out what a “fairer” share is and then actually delivering it is a big challenge.
In a recent Music Ally report on music publishing, Duffett-Smith expanded on this topic. “The relative value of the song versus the recording is not something that Spotify can really take a position on. Ultimately, we have to be pragmatic. In order to license the service, we need deals on both master and publishing rights,” he told us.
“The payout for both comes from the same pool of money. There is only 100% to go around. If one side gets more then the other side has to get less. As for what an equitable split would be, it is really for the industry as a whole to figure out. We are much more focused on growing the pie and creating long-term and sustainable revenue streams rather than getting into the minutiae of the relative split between the two sets of rights.”
Still, Duffett-Smith outlined ambitions on the transparency front, which could be one of the key areas for discussion with groups like Fair Trade Music.
“My first priority is to try and improve the transparency of the relationships that we have with the societies and publishers. It is really important to us that the significant amount of money that we are paying out is making its way through the system. There is a huge issue with ownership data and there is the collapse of the GRD [Global Repertoire Database], which is a real shame,” he said.
“The way the industry is moving, particularly in the US, is towards more direct licensing. In Europe there are the publisher licensing vehicles like SOLAR or PEDL, the Warner/Chappell vehicle. All of these require accurate repertoire information to be able to administer and pay properly.
“At the moment, unfortunately, there isn’t enough transparency as to who owns what and how the rates are distributed. What that leads to is a lot of frustration among the publishers and songwriters because significant amounts of money is being paid out by services such as Spotify but it is not finding its way through the system.”
Clearer data has already been one of Spotify’s strategies to respond to criticism from musicians. For example, the initial wave of artist complaints about streaming royalties led the company to launch free analytics for artists while also publishing figures for its average payouts to rightsholders.
This was essentially encouraging musicians to cross-reference these figures with their royalty statements, and thus shift the discussion onto the topic of the revenue percentage being taken by labels before it reached the artists.