Music Publishers Escalate Their War With Spotify

Music publishers are escalating their battle with Spotify, with the National Music Publishers Association sending a letter to the Senate and House of Representatives’ Judiciary Committee advocating a change that, if enacted, could significantly alter the way publishers and songwriters negotiate with the streaming service to determine their payments.

The NMPA — which represents the “big three” music publishers (Universal Music Publishing Group, Sony Music Publishing and Warner Chappell) along with many more independent publishing companies — called upon Congress to change an old license that the trade organization said “prevents private negotiations in a free market” and allows “big tech firms like Spotify” to “abuse” the current system.

“Large, foreign-owned companies, like Spotify, should not enjoy unfair advantages over American songwriters because of outdated federal policy,” NMPA CEO David Israelite wrote in the letter Tuesday. “By making one simple change, Congress can undo a more than 100-year old mistake in the compulsory license, and ensure songwriters and music creators continue To benefit from their creative efforts.”

The letter is the latest in weeks of increasingly heightened tension between the NMPA and Spotify. At the core of this matter is a bundle Spotify added to its premium subscription earlier this year, which has caused for a lower royalty rate to be paid for songwriters. (A rep for Spotify declined to comment.)

The intricacies of music publishing and royalties make the battle an inherently complex issue. A little known fact among music fans is that the particular type of royalties songwriters get from streams — called mechanical royalties — aren’t determined solely by publishers or music platforms, but by the CRB, a three-judge panel housed within the Library of Congress. This is a stark difference to record labels, whose royalties aren’t regulated by the government entity. Industry critics have bemoaned the CRB system, calling it archaic and pushing instead for more autonomy.

Every five years, publishers and platforms convene with the CRB to set the rates, and the most recent agreement set two years ago got particularly heated as the publishers and Spotify squabbled to get the rate settled.

Since the Music Modernization Act passed in 2018, the blanket license related to the mechanical royalties has been administered by the Mechanical Licensing Collective. In the NMPA’s letter, the organization’s CEO David Israelite called for a change that would essentially allow publishers to opt out of that license and “operate within a free market” instead.

The publishers and Spotify have been mainly drama-free since the CRB’s 2022 settlement, though that abruptly ended when Spotify changed its premium subscription to bundle music and audiobooks earlier this year. This is because the CRB statutes state that bundled offerings could call for lower royalty rates since music is only part of the subscription package. Billboard estimated in April that the bundle could mean Spotify pays writers and publishers $150 million less this year.

The NMPA as well as several songwriter advocacy groups have been increasingly critical of the move, and as a sign of the growing tension, the NMPA sent a cease-and-desist letter to Spotify over unrelated allegations of unlicensed musical content it claimed Spotify is housing through its lyrics, music videos and podcasts. The Mechanical Licensing Collective — which is responsible for paying mechanical royalties — sued Spotify last week over the change as well.

Songwriters, who’ve seen their earnings drop significantly in the streaming era, have voiced concern over the latest spat. Michelle Lewis, CEO of the Songwriters of North America voiced support for the NMPA’s push against Spotify but said that “we cautiously await more detailed language for the industry to review,” regarding the trade organization’s latest proposal in the letter. “As songwriters and creator advocates, we stand in solidarity with publishers to thwart Spotify’s blatant attempt at profiting on the backs of creators,” she said in a statement.

Last week, Spotify called the NMPA’s cease-and-desist “a press stunt filled with false and misleading claims,” and “an attempt to deflect from the … deal that the NMPA agreed to and celebrated back in 2022.” Regarding the MLC’s suit, a Spotify spokesperson said last week that “the lawsuit concerns terms that publishers and streaming services agreed to and celebrated years ago under [an] agreement.”

“Bundles were a critical component of that settlement, and multiple DSPs include bundles as part of their mix of subscription offerings,” the spokesperson said. “Spotify paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024. We look forward to a swift resolution of this matter.”

From Rolling Stone US.