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SpotifyShort Bytes: Spotify, a subscription-based music streaming service, in a recent blog post expressed their concern about the unfair distribution of royalties provided to the publishers and rightsholders for their music streamed through Spotify. The company has plans to introduce a Publishers Administration System that’ll help deserving songwriters and publishers to speedily get their compensation.

Spotify’s recent blog post reflects their concern about the unfair distribution of money paid as royalty amount to the publishers when a user streams its music. Spotify proudly announced they’ve paid a whopping $3 billion as royalties to various publishers since their service was first introduced, “including $300 million in the first quarter of this year alone”.

In the post, they stressed on the intricacies when it comes to crediting a songwriter for a soundtrack. The unavailability of pertinent documentation adds to the confusion of knowing the legitimate person for the royalty. More often, there are multiple owners for a single soundtrack.

According to Spotify, “that’s easier said than done because the data necessary to confirm the appropriate rightsholder is often missing, wrong, or incomplete.”

One of the most difficult challenges is the lack of accurate data as to who owns the rights to a specific track, especially when it comes to songwriter and publisher rights. In many cases, the ownership of the rights are not even finalized when a record is released; in many other cases, rights are held by multiple parties, rights change hands, and rightsholders remain entirely unclear.

Spotify does address the gospel that the royalty amount is very much important and is a wellspring of income for the songwriters and publishers. That’s why they set aside the royalty amount – though it amounts to a fraction of 1% of the total royalty – until they are able to find the correct owner.

According to Spotify, this issue is more of a global concern rather being limited to the United States. They expressed their rationale to work with the National Music Publishers Association (NMPA) and other big names in the music industry so as to come up with an efficient way to benefit deserving songwriters and publishers, when it comes to apportioning of royalties for the music available on Spotify and “we want to make sure they end up in the right hands”, wrote James Duffett-Smith in the blog post.

Spotify, founded in 2008 by Daniel Ek and Martin Lorentzon, has been subject to a critical opprobrium and accused on the note that they failed to compensate the artists fairly. One incident was when Taylor Swift’s complete discography was removed from Spotify by her label Big Machine Records.  “And I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music”, claimed Swift.

Many artists have reprimanded Spotify because of their market share-based compensation model. Market Share of an artist represents the number of streams of his song in proportion with the total songs streamed. Artists are paid by their respective publishers who are paid around 70% of the revenue generated from the market share. Sometimes the unpredictable compensation model can yield as low as $0.0011 per stream to an artist.

As a riposte to the allegations, Spotify made a defensive move by claiming that they are protecting the loss of revenue and rights of the publishers by migrating “them away from piracy and less monetized platforms and allowing them to generate far greater royalties than before.”

Spotify’s intentions to come up with a “Publishers Administration System” does point towards their remolding belief and that they want to revamp their public image. “And it is a complex problem – we are committed to solving it, but it is going to take significant time and effort”, as written in the blog post and did reflect their reluctant attitude towards indicating an accomplishment date for their commitment.

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Aditya Tiwari
When he is not writing for Fossbytes, he is busy eating his daily cheat meal and finding content to binge watch. Please feel free to suggest him some good stuff on Netflix. Reach out at [email protected]