This is just a quick reminder for those of you keeping score. The Berklee College Transparency Report got it wrong on streaming services. The Berklee College of Music asserted that songwriter streaming royalties were getting lost in HFA. We asserted that the problem was likely at Spotify because Spotify is required by law to obtain licenses, account to, and pay publishers and songwriters. Not HFA. HFA is a kind of “clearing house” for royalties and licenses for many publishers, but they don’t represent all publishers. HFA can only issue licenses for the publishers it represents Sure Spotify can hire HFA to help them make these payments but it is Spotify not HFA’s obligation to license, pay and account. Back in July I noted that a large portion of my catalogue was available on Spotify but to the best of my knowledge Spotify never issued the legally required NOIs and streaming mechanical royalties. I am not a member of HFA, therefore HFA may not issue licenses for my catalogue. Yet as far as I can tell Spotify never bothered to obtain licenses from myself or my agents.
Now we know from the Victory Records fiasco that this was not just my catalogue. That in fact Spotify didn’t obtain licenses pay or account to Victory Records on their entire publishing catalogue. And now publishers are saying that as much as 25% of all songs on spotify may be unlicensed. And this has nothing to do with HFA. Further the unpaid royalties are accruing at Spotify not HFA. Don’t state laws exist governing unclaimed property? If Victory Records hadn’t noticed the problem would Spotify have just kept the money?
We agree that transparency and unmatched and pending royalties are a huge problem with the music business but unlike the Berklee report (funded by the Google Ventures company Kobalt) we believe that in order to have true transparency you have to start at “the top of the waterfall.” You start with the revenue generated by streaming services like YouTube and Spotify. And you follow it from there. You don’t as Berklee suggests start two or three stages downstream with HFA.
If Berklee College of Music is serious about transparency and fair pay in music licensing, they should join us in calling our friends at Spotify to publish a list of unclaimed and pending royalties.
And then Spotify needs to follow U.S. law and stop using songs before they have obtained a license. It’s for their own good. Why? Ever heard of a class action lawsuit? Here is the Global head of communications for Jonathan Prince admitting that they don’t know who to pay:
“We want to pay every [fraction of a] penny, but we need to know who to pay,”
If they don’t know “who to pay” that means they never obtained licenses. This is an open and shut case. There is no Spotify IPO with a class action suit on the horizon.