Sony’s Options in Spotify Dispute

Sony Music Publishing CEO Challenges Spotify’s New Bundle Rate

The CEO of Sony Music Publishing, Jon Platt, recently issued a memo to the company’s songwriters regarding the ongoing dispute with Spotify. The conflict arose after Spotify reclassified its main subscription package as a bundle, aiming to decrease its royalty obligations to writers and music publishers in the US.

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Legal Battle Unfolds Over Spotify’s Reduced Royalty Payments

Platt expressed Sony’s firm stance against Spotify’s claim of being able to pay a lower bundle rate, resulting in a 20% reduction in payments. The company is exploring all available options to combat this, including the possibility of legal action and involving the Mechanical Licensing Collective (MLC).

Dispute Over Spotify’s Use of Bundling Provision

The compulsory license that governs payments to writers and publishers in the US includes a provision for bundles. Spotify is utilizing this provision by offering access to audiobooks within its premium package. However, Platt contends that Spotify’s bundling approach does not align with the terms agreed upon during the license update in 2022.

Spotify’s Alleged Tactics to Cut Royalty Payments

Spotify introduced audiobooks to its premium subscription tier, subsequently reclassifying the subscription as a bundle to claim reduced mechanical royalty rates. This move has led to a 20% decrease in royalty payments to songwriters, affecting only US-based royalties for now.

Industry Reaction and Legal Actions

The National Music Publishers Association, along with Sony Music Publishing, has been critical of Spotify’s bundling strategy. CEO David Israelite hinted at the possibility of legal recourse. Recently, the MLC filed a lawsuit against Spotify, arguing that the bundled content lacks significant value beyond tokenism.

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Collective Efforts to Uphold Royalty Standards

Platt highlighted collaborative efforts between Sony and industry associations to ensure Spotify continues to pay the standard mechanical royalty rates. Additionally, concerns were raised regarding Spotify’s unauthorized use of lyrics, songs in videos, and podcasts, which fall outside the purview of the compulsory license.

Addressing Compliance Issues with Spotify

The NMPA sent a notice to Spotify cautioning about unlicensed content on its platform, emphasizing the importance of fair compensation for songwriters across all usage scenarios. This action signifies a collective push to safeguard the rights and earnings of music creators amid evolving digital music consumption patterns.

In conclusion, the clash between Sony Music Publishing and Spotify underscores the complexities of royalty payment structures in the digital music landscape. It also sheds light on the industry’s concerted efforts to uphold fair compensation practices and maintain transparency in licensing agreements.

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