Spotify has taken a step closer to resolving its mechanical-royalties problems in the US, via an anticipated agreement with the National Music Publishers Association (NMPA).

As expected, the settlement will involve publishers claiming royalties for their tracks on Spotify where the publishing information was previously unmatched, with an additional “large bonus compensation fund” for publishers.

Billboard claimed that the basic royalties pool is $25m, with the bonus compensation fund adding in another $5m. It also reported that while the first pool will be divided according to streams of works on Spotify, the bonus pool payouts will be “based on each publisher’s estimated market share as calculated by the NMPA”.

As expected, dipping into these pools will also involve opting out of the ongoing class-action lawsuits against Spotify, while publishers will also gain the right to audit Spotify regularly to check its payouts are correct.

Additional notes of interest from Music Ally’s perspective: the NMPA said that the deal “will allow the entire industry to benefit by filling in the gaps in ownership information”.

One interesting question is whether the entire industry includes rival streaming services, several of whom are facing their own class-action lawsuits launched by publisher Yesh Music.

If Spotify does open up its publishing database for the wider industry, there could be some fun ripples in an area where opacity around who owns what has been a lucrative situation for some industry entities.

The fact that the NMPA has brokered this agreement will spark more debate in the short term, though.

In fact, class-action litigant David Lowery’s lawyers got their thoughts in early this week, warning songwriters and publishers to scrutinise the terms of any NMPA/Spotify deal closely, and suggesting that the lack of court oversight in any such agreement was unwelcome.

The impact of the settlement on Lowery and fellow songwriter Melissa Ferrick’s lawsuits against Spotify remains to be seen, but we expect further questions about how the settlement will work for non-NMPA publishers and songwriters, as well as that market-share-based division of the bonus pool.

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Stuart Dredge

Music Ally's Head of Insight

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