Spotify has warned that it may shut down its service in Uruguay if a new budget bill becomes law in its currently-proposed form.

Why? Because it would introduce ‘equitable remuneration’ for musicians, with a lack of clarity over whether that applies to streaming services, and if so, whether DSPs rather than rightsholders will feel the impact.

This is about the ‘Rendición de Cuentas’ bill, and specifically about articles 284 and 285, which modify Uruguay’s existing copyright law.

According to news site El Pais, the first adds ‘the internet and social networks’ to the list of formats that, when music is played, performers have the right to receive remuneration.

The second focuses more widely, ruling that “the agreements entered into by authors, composers, performers, directors and scriptwriters regarding their power of public communication and making phonograms and audiovisual recordings available to the public generate, in all cases, the right to fair and equitable remuneration for their exploitation.”

Spotify isn’t happy. “If implemented, and Spotify were forced to pay twice for the same music, it would make our business of connecting artists and fans unsustainable in this market,” its spokesperson told Music Ally this morning.

“Spotify would then have no choice but to stop being available in Uruguay, to the detriment of artists and fans.”

What’s happening here? We’ve reported on the debate in the UK over whether equitable remuneration (ER) should be introduced for some streams – likely the most radio-like / lean-back ones.

The assumption there has been that streaming services would not be paying more money out, but rather that a portion of those payouts would be paid directly to artists (via a collecting society). Thus, ER would reduce labels’ share of the royalty pie. Spotify is saying that in its currently-proposed form, that’s not what would happen under the Uruguayan budget bill.

El Pais quoted from a letter sent to the country’s minister of education and culture by Spotify’s public affairs boss Dustee Jenkins outlining its concerns.

She claimed that the bill “imposes an additional payment that streaming services will have to make to musical artists in Uruguay” without “considering any mechanism to compensate that amount for the costs of acquiring already existing licences”.

This may seem a localised dispute in a small market. Uruguay was the 53rd biggest recorded-music market in 2022 according to the IFPI. Its revenues grew by 20.2% that year, but only to $13.2m, with streaming accounting for just under two thirds (64.4%) of that.

However, the row over Uruguay’s Rendición de Cuentas may foreshadow similar arguments in larger markets if and when they move to introduce ER for streaming in some capacity. 

Spotify’s view is that the slim margins of music-streaming can’t shoulder ER as an additional payout on top of their existing licensing costs.

We’ll be keen to see what the other key DSPs in Uruguay – Amazon Music, Apple Music, YouTube and Claro Música – think of the plans there. Spotify is certainly making its stance clear.

“We want to continue giving artists the opportunity to live off their art and Uruguayan fans the opportunity to enjoy and be inspired by it,” the spokesperson told Music Ally, before repeating their warning.

“If these articles are included in this bill and Spotify is forced to pay twice, we will have no choice but to cease service in Uruguay.”

EarPods and phone

Tools: platforms to help you reach new audiences

Tools: Kaiber

In the year or so since its launch, AI startup Kaiber has been making waves,…

Read all Tools >>

Music Ally's Head of Insight