Sony Music Publishing is considering action against Spotify over a recent change that would limit royalties payments to songwriters and publishers.
At issue is Spotify’s decision to reclassify its premium subscription tiers into bundled services, allowing the company to pay lower royalty rates.
The move has drawn criticism Machinery Licensing Collective (MLC) sued Spotify last week (May 16) in the U.S. District Court for the Southern District of New York. The MLC is a nonprofit organization designated by the U.S. Copyright Office to ensure that music streaming services like Spotify pay mechanical royalties to songwriters and music publishers.
Spotify began recategorizing its premium individual, duo and family subscription streaming plans into bundled subscription products in early March, as these plans now offer access to audiobooks.
Under a legal settlement reached in 2022 gramophone record No. 4music publishers and streaming services agreed that U.S. bundles could pay publishers and songwriters lower mechanical royalty rates than standalone music subscription services.
“Late last year, Spotify added audiobook offerings to its premium subscription tier in the US and several other markets. Spotify then unilaterally reclassified its subscription offerings into bundles. They claimed this allowed them to pay lower mechanical usage fee.
Jon Platt, Sony Music Publishing
However, music companies and organizations representing songwriters believe Spotify’s recent move pays too little royalties to songwriters and publishers.
In a letter to songwriters and composers Jon PlattChairman and Chief Executive Officer, sony music publishingand obtain by digital music news, Platt said songwriters and composers, represented by SMP, have seen about a 20% reduction in royalties from U.S. Spotify streaming.
“Late last year, Spotify added audiobook products to its premium subscription tier in the US and several other markets. Spotify then unilaterally reclassified its subscription products into bundles. They claimed this allowed them to pay reduced mechanical usage fees ,” Platt wrote.
“Effectively, Spotify’s position is that all U.S. subscribers are part of the bundle but do not have the option to choose the bundle.”
Platt further argued that the bundling did not meet the standards agreed upon in the previous CRB Phono IV lawsuit in 2022.
Platt said SMP is working with national music publishers association “And consider all options to execute on the rate of improvement achieved with CRB Phono IV.”
“We are working with the National Music Publishers Association (NMPA) and considering all options to implement the improved rates achieved with CRB Phono IV.”
Jon Platt, Sony Music Publishing
The NMPA recently sent a letter to Spotify notifying the company of unlicensed videos, lyrics and podcasts on its service, which Platt said is “an important step toward ensuring that songwriters are properly compensated in all aspects of the Spotify platform.”
However, Spotify hit back at the NMPA’s letter, calling it a “news stunt filled with false and misleading claims,” while also arguing that the music publisher’s legal threats for alleged infringement on its platform are “an attempt to divert attention from Phono IV.” force”. The NMPA agreed to and celebrated this deal back in 2022. “
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