Nashville Music Organizations Challenge Spotify Over Royalty Practices
In a recent turn of events, organizations representing Nashville songwriters, namely the Nashville Songwriters Association International (NSAI) and the Association of Independent Music Publishers (AIMP), have taken a stand against Spotify, one of the leading digital streaming platforms across the globe. The associations are contesting Spotify’s bundling offerings, citing concerns that the company’s practices could curtail royalty payouts to songwriters by approximately $150 million.
Music and Audiobook Bundles: A Threat to Copyright Royalties?
Spotify’s recent introduction of its music and audiobook bundle, included into its Premium tier suite of services, has drawn tremendous flak from the aforementioned Nashville-based organizations. They believe that the decision to bundle content and offer it at a discounted price could lead to an annual reduction in mechanical royalties of nearly $150 million. They argue that this negatively impacts the already struggling songwriter community, denying them their well-deserved earnings.
Spotify’s current bundling strategy involves combining audio books and music packages, and these bundles are monetized at a royalty rate that differs from that applied to standalone music content. The NSAI argues that this tactic disregards the settlement issued by the Copyright Royalty Board (CRB), an agreement that Spotify, the NSAI, the National Music Publishers Association (NMPA) and the Digital Media Association (DiMA) had agreed to in 2022. The discrepancy has called into question Spotify’s commitment to supporting creators.
Music-Only Tier from Spotify on the Horizon?
In response to the concerns raised, Spotify has projected that it will pay more to publishers and agencies that collect royalties in 2024 than it did in 2023. The company has proposed rolling out a ‘music-only’ service tier that will maintain royalty payment rates consistent with standalone music content. However, Spotify has yet to specify when this new tier will be introduced.
The NSAI and AIMP, meanwhile, have cautioned that they could take counteraction if Spotify does not pay heed to their concerns. The associations have slammed Spotify’s attempts to ‘circumvent’ the law, describing the strategy as a “loophole”.
Bart Herbison, the Executive Director of the NSAI, has urged Spotify to reconsider its decision, raising the possibility of the NSAI taking legal action if Spotify doesn’t rectify the situation.
Fallout from the Music Industry Versus Catalog Bundling
NSAI’s Board President, Lee Miller, has accused Spotify of exploiting a ‘technicality’ to save on royalty payments. He observed that the company’s decision gives the impression that their legal team has developed a plan to offer reduced rates to copyright holders through the bundling of music with other offerings. This move, according to Miller, sidesteps a deal that the courts have already established and is perceived as illegal.
While Spotify has not yet announced the financial implications of its bundling initiative on royalties payouts to songwriters, it has alleged that the $150 million figure proposed by NSAI and AIMP is misleading.
