Home » Copyright/Intellectual Property, Royalties » How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.

How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.

5 September 2017

From The Trichordist:

Spotify could have completely avoided its legal issues around paying songwriters.  The company could have sought to obtain the most recent information about the publishing and songwriters for every track at the service.  The record labels providing the master recordings to Spotify are required to have this information. All Spotify (and others) had to do, was ask for it.

Here’s how it works.

For decades publishers and songwriters have been paid their share of record sales (known as “mechanicals”) by the record labels in the United States. This is a system whereby the labels collect the money from retailers and pay the publishers/songwriters their share. It has worked pretty well for decades and has not required a industry wide, central master database (public or private) to administer these licenses or make the appropriate payments.

This system has worked because each label is responsible for paying the publishers and songwriters attached to the master recordings the label is monetizing. The labels are responsible for making sure all of the publishers and writers are paid. If you are a writer or publisher and you haven’t been paid, you know where the money is – it is at the record label.

Streaming services pay the “mechanicals” at source which are determined by different formulas and rules based upon the use. For example non-interactive streaming and web radio (simulcasts and Pandora) are calculated and paid via the appropriate performing rights society like ASCAP or BMI. These publishing royalties are treated more like radio royalties.

. . . .

Every physical album and transactional download (itunes and the like) pays the “mechanical” publishing to the record label directly, who then pays the publishers and writers.  This publishing information exists as labels providing the master recordings to Spotify have this information. All Spotify (and others) have to do, is ask for it.

Link to the rest at The Trichordist

PG says the system doesn’t sound all that simple, but he’s not in the music business.

Copyright/Intellectual Property, Royalties

3 Comments to “How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.”

  1. “All Spotify (and others) have to do, is ask for it.”

    All Spotify (and others) had to do, is pay another middleman their cut.

    Hmmm, and radio stations paid their cut every time they played a song too – right? Or were they more often paid to play a song? It’s been a while for me …

    • Its a moot point now, since the conglomerates that own the labels also own the stations, but radio stations never paid the record label for playing the recording. They paid the PROs (Organizations that represent the writer/publisher, not the artists/labels) for using the song (not the performance of the song).

      This is one of the reasons labels lean towards artists who can write their own music. In exchange for signing with the label, the artists often sign away their publishing rights to the label’s publishing arm, and the record label gets another revenue stream.

  2. It is much more complicated than that, of course, and the existing system hasn’t worked all that well for anyone but the major labels, of course… but as the trichordist is essentially an RIAA mouthpiece, that’s not too surprising. For how the record labels really work (much like book publishing), I always refer back to Tim Quirk: http://gizmodo.com/5417318/my-6247-royalty-statement-how-major-labels-cook-the-books-with-digital-downloads

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