Many in the industry were well aware that a problem with improper licensing and royalty payments existed, but it wasn’t until Audiam began matching master recording royalty payment statements against music publishing payment statements that the true extent of the problem became obvious. Depending on who is talking, between 10 to 25 percent of songs interactive on services like Spotify are not properly licensed and/or not distributing royalty payments. Sources tell Billboard that Spotify owes music publishers and songwriters around $25 million, however another estimate puts that figure at $17 million.
“We are committed to paying songwriters and publishers every penny,” said Spotify global head of communications and public policy Jonathan Prince in a statement on Monday’s news of David Lowery’s filing. “Unfortunately, especially in the United States, the data necessary to confirm the appropriate rights holders is often missing, wrong, or incomplete. When rights holders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities…”
But many take issue with that assessment, contending Spotify and other interactive services knew they had a problem from the beginning but ignored it and did not build the proper systems to manage licensing.
“Spotify blames everyone but Spotify for its infringement, non-payment and non-compliance,” says Audiam founder and CEO Jeff Price. “Its rationale appears to be [that] everyone else caused Spotify to infringe on music as all of us don’t have the ‘data.’ This is a misleading statement. First, Spotify does not need to know who wrote a song to determine if a composition is licensed. If Spotify does not know who wrote the song, then it most likely doesn’t have a license. Therefore, don’t use the song.” Price points out that Audiam has supplied data to the catalogs that it administers and it still is not being properly paid by Spotify.
“The real issue is that Spotify built limited-to-no systems to get licenses, accept data and make payments,” Price complains. “It took the world’s music without, in many cases, knowing whose music it was, and used it with no licenses and without making payments, similar in many ways to the original Napster.”
Sanford L. Michelman of Michelman & Robinson LLP makes a similar argument. “The underlying issue is Spotify has a business model that is catch-as-catch-can,” he says. “If you are going to take a songwriter’s work, then get the permission to do it. It’s not a system where if you catch me without permission, [Spotify] will pacify you with some more dollars.” It’s not supposed to be about the songwriter catching the service with its hand in the cookie jar, he says. Mona Hanna tells Billboard that the firm’s case “is designed with the express purpose of protecting artists’ rights and hoping that this result in a change in how Spotify operates.”
Concurrently, Spotify has apparently settled with Another Victory (an Audiam client), the publishing arm of Chicago-based hard rock label Victory Records, as the publisher’s songs are now available to stream on Spotify. Price says the service is still playing hardball with his company, however, as well as many other publishers and catalogs, including those of Metallica and Bob Dylan. Price claims Spotify is ignoring his communications about getting his company’s other clients properly licensed and paid.
Spotify, Warner/Chappell, Sony/ATV and Universal Music Publishing Group declined to comment for this report. Executives at the other streaming services were unavailable for comment.
Article Appeared @http://www.billboard.com/articles/business/6828825/spotify-threatened-with-another-class-action-lawsuit-as-disputes-over