NY State Abandoned Property Law and Spotify’s Unpaid Songwriter Royalties Crisis

In May of 2004 NY State Attorney General Eliot Spitzer announced that he had settled with the major record labels to pay out $50 million dollars in unpaid royalties.   The action was driven by attorney Bob Donnelly.  As The NY Times reported at the time:

Mr. Donnelly encouraged Mr. Spitzer to use New York State’s abandoned-property law.  ”The law says that after five years of holding somebody’s property that has been theoretically abandoned, you have to turn the money over to the state,” Mr. Donnelly said.

Mr. Donnelly had previously secured royalty payments for the Ronettes, Foreigner and Bootsy Collins. ”The labels had clearly violated the law” by not transferring the money to the state,” he said.

The Spotify unpaid songwriter royalty crisis is potentially much worse for spotify.  At least the major labels had licenses and contracts with artists.  In the case of Spotify as much as 25% of the songs on their service may not have been properly licensed.  In my own case at least 150 songs I control are not correctly licensed.  The problem of unlicensed songs is potentially much more serious than simply non-payment of royalties because it becomes copyright infringement issue with possible damages.

Regardless, Chris Castle an artist attorney and former label executive estimates that Spotify may have as much as $150 million in unpaid royalties to songwriters.  Spotify launched in the US July 14th 2011 and presumably they began accruing unpaid (and unlicensed) royalties on that date, this would mean that Spotify is gonna have to start forking over serious cash to NY State in less than nine months.

We wonder if A.G. Schneiderman of NY has noticed this yet?  He certainly has shown an interest in the shenanigans in the music streaming space.  Seems like a possible $150 million dollars worth of shenanigans is worth looking into.  He must be familiar with the Spotify as they would seem to be the only plausible complainant in the music streaming investigation.

But what do I know?  I’m just a simple country rocker.