Spotify defends its CRB-rates appeal – but NMPA boss isn’t impressed


Under fire from US publishers, Spotify made its case for why its appeal against new songwriter-royalty rates isn’t an attack on that community yesterday. But it was met with a swift, furious response from NMPA boss David Israelite, who’s leading the charge against Spotify and Amazon over this issue.

Spotify’s statement came in a blog post aimed directly at songwriters, offering five points. That included a direct denial of suggestions that its appeal is ‘suing’ songwriters. “No, Spotify is not suing songwriters. Spotify, Amazon, Google, and Pandora have each individually appealed the CRB outcome. The National Music Publishers’ Association, or NMPA, also filed an appeal. An appeal is the only avenue for anyone to clarify elements of the CRB ruling,” claimed Spotify.

It went on to stress that Spotify *does* think songwriters should be paid more, and that it would support the new rates set by the US Copyright Royalty Board *if* they “cover the right scope of publishing rights” – Spotify says that the rates don’t consider the costs for videos and lyrics, for example. Spotify also claimed that “the CRB’s decision makes it very difficult for music services to offer ‘bundles’ of music and non-music offerings” and also that “the CRB judges set the new publishing rates by assuming that record labels would react by reducing their licensing rates, but their assumption is incorrect”.

Tying this row back into the long-simmering debate about whether songs (as opposed to recordings) should get a bigger share of streaming royalties is a fairly gloves-off move, albeit one that shouldn’t come as a surprise: Spotify and fellow streaming services have long been the piggies in the middle of this argument. However – and equally unsurprisingly – the NMPA reacted quickly and angrily to Spotify’s line of argument.

“Wow. I didn’t think Spotify could sink much lower – but they have. This statement is one giant lie,” Israelite told MBW. “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. The CRB ordered a rate increase for songwriters. Spotify is against it. It really is that simple.” The appeals will be settled one way or the other, but there’s a real risk that the greater harm will be the bad blood that lingers.

As the lightning rod for all this, Spotify won’t be short of advice from friends and foes alike. “If it was run properly, they got away from their free tier, and they brought in a company like Goldman Sachs to take a look at their costs, they could probably pay songwriters what they are due,” suggested lawyer Dina LaPolt, co-founder of Songwriters of North America – SONA is equally unimpressed with Spotify’s arguments, as you may have guessed.

Midia Research’s Mark Mulligan offered a different take. “There is a way to mollify both sides: price increases… both sides cannot get more out of the same pot of cash. So, the pot has to become bigger, and distribution allocated in a way that not only gives both sides more income, but also allows more margin for streaming services”. It’s an equation worth wrestling with, but the good faith required between labels, publishers and streaming services may be in short supply for the moment.

Written by: Stuart Dredge