When the U.S. Copyrights Royalty Board voted to increase songwriter payouts by 44% between 2018 and 2022, Spotify was one of four major streaming companies (along with Amazon, Google, and Pandora) to appeal the ruling. Though they continue to oppose the decision, they are now using language from the new policy to claim that they overpaid publishers because there is never a shortage of ways to flex one’s audacity. Now, they are asking to recoup the alleged surplus.
The new ruling provides streaming platforms with three different models for determining royalty rates, of which the platform would pay according to the highest payout. One model uses a flat rate per subscriber, equating premium family plans to 1.5 users and deeply discounted student plans .5 of a subscriber. Based on this math, Spotify is claiming to have overpaid by millions.
A spokesperson from Spotify said in a statement to Music Business Worldwide: “According to the new CRB regulations, we overpaid most publishers in 2018. While the appeal of the CRB decision is pending, the rates set by the CRB are current law, and we will abide by them–not only for 2018, but also for future years in which the amount paid to publishers is set to increase significantly.” But the streaming giant doesn’t plan on recouping the funds all at once; they plan to garnish the amount from royalty checks to publishers through the end of the year in order to “minimize the impact.”
David Israelite, the CEO of the National Music Publishers Association, took a moment to blast Spotify’s decision to take money back from publishers while still combating the very rule they’re exploiting: “I find it so hypocritical for a digital service that is appealing the CRB decision to then take advantage of the parts of that decision that benefit it. I guess we shouldn’t be surprised.”
We’re sure that the publishers will totally sympathize with this corporate tantrum and not fight back at all. Meanwhile, Apple Music has yet to join the appeal.