5 Things Wrong With Major Music Publisher Spotify Settlement

  1.  It’s not a real settlement, it’s more like a bail out.   It doesn’t get rid of the real problem: infringement liabilities.   Spotify will still be loaded with an unknown number of songs (hundreds of thousands?  millions?) that were never licensed and thus Spotify will still be infringing copyrights on a mass scale.  Why?  It would require tens if not hundreds of thousands of independent songwriters who have no relationship with NMPA to opt into the NMPA’s publisher payout settlement.  How likely is that to happen?  (Not to mention songwriters who live outside the U.S.)
  2. The NMPA publisher payout settlement supposes there is a royalty rate with which to calculate unpaid royalties.  But there is no royalty rate!   Why?  It is highly likely that Spotify failed in many cases to obtain compulsory licenses BEFORE they made available the songs (hence the settlement).   As a result by law Spotify is forbidden to use the compulsory licenses on a recording-by-recording basis (and song-by-song) and the associated statutory royalty rate.  This means Spotify must negotiate a direct deal with each songwriter.  Until that is done there is no way to calculate unpaid royalties.  Spotify is trying to unilaterally impose some theoretical royalty rate on all the world’s songwriters.
  3. The settlement essentially forces publishers and songwriters to build Spotify’s licensing and royalty database.  Can you imagine the outrage if a record label demanded that performers and managers build the back office royalty systems before they were paid?  Why?
  4. It looks like the $5 million “penalty” would be divided up among publishers by market share.  So this means the major publishers would capture most of this revenue.  Now think about it.  Who IS getting paid by Spotify?  The major publishers! So now they get paid again?  What’s the penalty for if the majors were already getting paid? The unpaid and unclaimed royalties are more likely to belong to the independents who weren’t licensed.
  5.  I have a fundamental objection to the premise that Spotify and HFA have somehow learned their lesson and reformed their practices and are thus deserving of a settlement.  It appears that they continue to engage in practices that violate a host of laws (not just copyright). Allow me to demonstrate.  HFA just sent to me on behalf of Spotify (via USPS) what appears to be backdated NOIs (“notice of intent to obtain a compulsory license”).  Here’s one postmarked Feb 16 2016  that we received for a use starting in 2011–FIVE YEARS LATE!  And it’s “signed” by Ken Parks, a Spotify executive who left the company nearly a year ago.  Not only that, but it lists an address for HFA that they didn’t have until they moved in 2012!  I have to believe I’m not the only one who is getting backdated NOIs trying to trick me into accepting them.

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