Spotify’s relationship with publishers hits the rocks – again


A new Spotify / music publishing story broke on Friday, but there’s a bigger picture here: the increasingly-dispiriting story of the streaming service’s approach towards the publishing community, as well as the perception of Spotify by those publishers and songwriters. At a time when recorded-music revenues are going from strength to strength, what’s happening around publishing for Spotify should be a cause for concern across the industry, not just by those directly affected.

Start with the latest story though, which focuses on the latest publishing royalty-rates set by the US Copyright Royalties Board for 2018 to 2022 – rates that Spotify, together with several other streaming services, is appealing against. And yet…

“According to the new CRB regulations, we overpaid most publishers in 2018. While the appeal of the CRB decision is pending, the rates set by the CRB are current law, and we will abide by them –  not only for 2018, but also for future years in which the amount paid to publishers is set to increase significantly,” is how Spotify’s spokesperson put it to several industry publications on Friday. “Rather than collect the 2018 overpayment immediately, we have offered to extend the recoupment period through the end of 2019 in order to minimise the impact of the adjustment on publishing companies.”

Cue David Israelite. The NMPA boss was quick to denounce Spotify’s claim. “I find it so hypocritical for a digital service that is appealing the CRB decision to then take advantage of the parts of that decision that benefit it. I guess we shouldn’t be surprised,” he told both MBW and Variety, with both sites adding outraged quotes from anonymous publishers. “Spotify is once again showing its true colours. It’s just a heartless tech company that doesn’t really care about artists,” said Variety’s source. “This puts some music publishers in a negative position. It’s unbelievable,” said MBW’s. “All the mechanical royalties Spotify never paid me as a DIY publisher, should I send them a bill?” tweeted musician Zoe Keating, with a reminder of those class-action lawsuits.

Let’s recap: Spotify settled the class-action lawsuits brought against it by independent songwriters over usage of their works without the necessary licences; its decision to appeal against the new CRB rates – and the timing of its announcement – caused a great deal of anger in the US, and an NMPA blog post attacking its “falsehoods”; and it found itself in court with publisher Warner/Chappell over its Indian launch earlier this year, amid an argument that saw the publisher publicly accuse Spotify of lying, and term the streaming service’s claims of ‘abusive behaviour’ by Warner/Chappell as “appalling” (an actual spokesperson quote). And now the announcement claiming publishers have been overpaid.

It could be argued that Spotify has the right to make its views known – and have them tested legally – in these cases. If it disagrees with the CRB rates, it can appeal, and a process is in place to judge whether that appeal has merit. If it believes streaming qualifies for statutory licensing in India, it can make that case, and see whether regulators and courts agree. If it thinks it has overpaid royalties, it can explain why and what it plans to do about it. In all these cases, investors may well be cheering the company on, if they see all this helping to pave the way to profit. And yet…

And yet it’s hard not to think that Spotify’s approach to the publishing community is puzzling. Can any margin gains *really* make up for the reputational damage it is suffering among publishers and songwriters – again, not just for the decisions it has taken, but for the manner in which those decisions have been communicated both privately and publicly to the companies and people affected?

Music Ally has been covering Spotify ever since its launch in 2008, and right now more people within the music industry – not just its familiar critics, but people who consider themselves to be supporters of streaming and Spotify – are voicing concerns about the company’s attitude and approach than any time we can remember before. Some see it as arrogance; others see it as a lack of awareness; others see it as deliberate power-play in an era of shifting sands in those power dynamics between rightsholders and DSPs. (Under this view, Friday’s announcement would be seen as a ‘You want us to abide by these new CRB rates? Well, see where that gets you…’ point being made.)

Spotify would argue it’s simply standing up for its rights, but it cannot be blind to the damage being caused not just by the individual clashes with publishers, but by the way each adds another layer of resentment and distrust to a relationship that should be one of its core pillars. A healthy music industry needs a healthy Spotify, and if the company is to pay publishers more money, the blunt question for everyone is whether that comes from labels’ share or its own already-thin margins. Which is to say this: Spotify does have a case to make, but it’s currently making that case in ways that are blowing up bridges with the publishing community, rather than building them.

Written by: Stuart Dredge