On 11th March, 2019, Spotify Technology SA issued a response to criticism it received to the Thursday announcement that it along with Google, Pandora and Amazon teamed up and made to appeal a controversial ruling by the U.S. Copyright Royalty Board, if went through, would increase payouts to songwriters by 44%.
In a blog post, the streaming giant insisted that it is not suing songwriters, it does believe they should be paid more than they currently are, and that its issue is primarily with the “complex” CRB rate structure the “significant flaws” in the way it was set.
Spotify, in its blog post, attempted to explain its motivation behind the appeal. “In the U.S., the royalty rates for publishing rights for digital music services are determined by a panel of judges, the Copyright Royalty Board (CRB). The rates also create a reference point for services that don’t rely on these government-set rates, and they indirectly influence the ways that publishing license rates work around the world. The CRB recently came to a conclusion about how these rights and rates would work for the next few years. And we appealed the outcome,” it read.
The company has also laid its stance in FAQ style on their official website.
Spotify and other technology giants appealed a ruling that increased the royalties they must pay to songwriters, a move that threatened to further damage the companies’ already-tenuous relationship with the music industry.
The joint statement from Spotify, Google, Amazon and Pandora read: “The Copyright Royalty Board (CRB), in a split decision, recently issued the U.S. mechanical statutory rates in a manner that raises serious procedural and substantive concerns. If left to stand, the CRB’s decision harms both music licensees and copyright owners. Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision.”
Songwriters celebrated last year when the Copyright Royalty Board ruled that they will get at least a 15.1% share of streaming revenues over the next five years, a raise from the previous rate of 10.5%. The bump, which came in January 2018, was the biggest ever, the National Music Publishers Association said at the time.
But music-streaming services, most of which either lose money or only eke out a small profit, warned the change would make it harder to operate. They also complained that the ruling was made without enough input from them.
The board’s decision “raises serious procedural and substantive concerns,” Spotify, Amazon.com Inc., Alphabet Inc.’s Google and Sirius XM Holdings Inc.’s Pandora said in a statement. “If left to stand, the CRB’s decision harms both music licensees and copyright owners.”
Songwriters share from streaming platforms
Songwriters have long complained they receive too small a share of sales from streaming, which now accounts for 75% of the business in the U.S. — the world’s largest music market. The rates under discussion in this case govern payments from on-demand services such as Spotify and Apple Music, which make up the vast majority of streaming sales.
The technology companies waited until the last day to appeal the decision, undermining their recent efforts to court songwriters, said David Israelite, chief executive officer of the NMPA.
“I’m sure it was their strategy of how best to screw over songwriters. It pulls away the disguise of being friendly,” Israelite said.
Israelite said Apple is the one tech heavyweight that didn’t appeal the case. A spokesman for Apple didn’t immediately respond to a request for comment.
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