Spotify vs. Songwriters (again)... and a 'likely' legal fight

On this Music Business Worldwide podcast, MBW founder Tim Ingham
is joined by David Israelite, the President and CEO of the
National Music Publishers' Association.

We probably don't need to ask you to guess which particular
controversial topic Israelite and Ingham discuss.

Earlier this month, Spotify announced that it was changing the
way it calculates mechanical royalty payments for songwriters and
publishers in the US.

Spotify has re-categorized its Premium subscription tiers in the
States as 'bundles,' enabling it to pay out a lesser mechanical
royalty rate to songwriters than it would if said Premium tiers
were classified as pure music services.

Spotify believes it is entitled to re-categorize these tiers as
'bundles' due to the fact that SPOT now offers access to music
plus audiobooks.

The idea that 'bundled' services should be entitled to a lower
mechanical royalty rate (vs. standard music subscription
services) was enshrined in the so-called 'CRB IV'
agreement/settlement between publishers and Spotify in the
States, signed in 2022, and covering the years 2023-2027.

As David Israelite explains on this podcast, the NMPA is
currently considering legal action against Spotify that would
seek to undo the newly-lowered 'bundle' mechanical royalty rate
on the service.

This isn't the first time that Spotify and songwriters have
butted heads, of course: In 2019, the US Copyright Royalty Board
(CRB) decreed that Spotify and other streaming services needed to
increase the headline mechanical royalty rates they paid
publishers and songwriters in the US for the period covering
2018-2022.

That decision from the CRB (in the so-called 'CRB III' process)
followed a campaign of lobbying and general legal cajoling from
the NMPA, on behalf of songwriters and publishers.

Spotify (and Amazon) subsequently appealed this ('CRB III')
ruling, attempting to drive down the mechanical royalty rate they
paid songwriters under US law.

The CRB, though, stood firm – and told the streamers they must
increase their rate.

Now, with its 'bundle' reclassification under 'CRB IV', Spotify
is once again attempting to push down the percentage of its
revenue that it must, by law, pay to songwriters and publishers
in its biggest market.

Will Spotify ultimately get away with it? Stay tuned.

As Israelite confirms on this podcast: "This will likely end up
in a legal conflict..."