As Billboard reports, David Lowery of Camper Van Beethoven and Cracker fame is suing Spotify for $150m. In a class-action suit filed in the Central District Court of California, Lowery alleges Spotify “knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.” The suit comes amidst settlement negotiations between the streaming services and the National Music Publishers’ Association, which seeks to rectify the millions of dollars in unpaid royalties to publishers. Spotify crows loudly and often about how much money they’ve paid out in royalties since the service launched in 2011, so what’s Lowery so mad about?
Mostly, Lowery is mad that of the billions Spotify has paid out, only a fraction has gone to songwriters and publishers. As we’ve discussed at length, the major labels have hedged their bets and begun colluding with the streaming services, even directly investing in them. They’ve negotiated favorable rates on royalties for the master recordings that they own, often at the expense of the people who own the publishing rights—namely, songwriters and publishers. The streaming services collect massive amounts of data, but songwriters don’t have the resources and access that the labels do, so they have to take them to court when the services don’t bother to seek out the rights holders to make those royalty payments.
In an email interview with the Wall Street Journal, Spotify’s Jonathan Prince said, “We want to pay every penny, but we need to know who to pay. The industry needs to come together and develop an approach to publishing rights based on transparency and accountability.”
Like the top commenter on that Wall Street Journal article suggests, “this problem is screaming for a technology solution.” One tech company looking to enforce that accountability is Audiam. Their recent audit of data provided to Victory Records found that even as Spotify paid out master recording royalties to the label, they weren’t paying the publishing royalties to its sister company, Another Victory, which owned the publishing rights. Bob Dylan, the Red Hot Chili Peppers and Metallica are among Audiam’s other clients, and CEO Jeff Price told the WSJ that streaming services typically fail to pay songwriter royalties on 15% to 20% of listens to songs composed by his clients. He claims the problem isn’t that the services don’t want to pay the money they’ve collected from those streams; it’s that they don’t always know who owns the rights, or how to find them.
So everyone involved wants the songwriters and publishers to get paid. Great. But managing and sorting data costs money, and no one wants to foot the bill. Spotify would seem best equipped to do this, with their massive data servers and recent braintrust acquisition the Echo Nest to parse it. Like most tech companies, Spotify is still focused on growth rather than profit, and any additional resources spent on seeking out who to pay will only put them further in the red.
Still, it’s unfair to place the burden of parsing all that data on individual songwriters and publishers, or even independent record labels. Spotify treats songwriters like media outlets treat freelancers—unless you come banging down the door for looking for your check, they’re gonna assume you don’t want it badly enough, and not waste any energy seeking you out. But at least freelancers have contracts; If you don’t have the resources to join Harry Fox Agency (HFA) or retain the services of Kobalt Music Group, Spotify will still collect royalties from your work, but you won’t. The current system of shrugging off responsibility to middlemen like HFA and Kobalt is unsustainable, and as more people use and join streaming services, there will only be exponentially more data to parse.
The industry needs an affordable, standardized system for cataloging publishing royalties, equally funded by both the platforms and the rights holders. It could even adopt Spotify’s “freemium” model, letting rights holders check their database for royalties collected, but charging a small fee to have the system process their payment. It seems that Spotify has already felt enough pressure to assume some of the responsibility, announcing their intention last week to “invest in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem.”
For now, at least, small companies like Audiam will continue to slog through the data dumps the streaming services provide, auditing their books and forcing payments when they find discrepancies. But there’s a vacuum to be filled, and until it is, millions of dollars in royalties will continue to sit those black boxes, just waiting to be claimed.