Yesterday saw the official announcement of a long-rumoured settlement offer from Spotify to members of the US National Music Publishers’ Association.
The agreement broadly involves two key elements: a pledge from Spotify to match publishing rights correctly in future – allowing songwriters and publishers to update an internal database – as well as a settlement sum to be shared amongst the NMPA’s members (and subsequently their songwriters).
According to Billboard, this sum works out at around $30m – with $25m in owed royalties, plus a $5m bonus payment in would-be damages.
Songwriters will have three months from the beginning of April to decide whether they want to opt-in to the settlement, claiming their rightful share of streaming cash drawn from the $25m.
It is understood that publishers will split the additional $5m figure based on market share.
“The NMPA / Spotify settlement will most assuredly require participants to waive their right to be part of the class action.”
The issue has been given major prominence in the past few months after two songwriters – David Lowery and then Melissa Ferrick – both launched $100m+ class action lawsuits against Spotify for allegedly failing to pay due mechanical royalties in the US market.
These suits have potentially slowed down the charge of Spotify boss Daniel Ek (pictured) towards floating his company on the stock exchange.
Below is a Q&A with US law firm Michelman & Robinson, LLP, in which it imparts its advice to songwriters as to whether they should sign up to the NMPA’s deal.
Fair warning: you can expect some heavy scepticism here.
Michelman & Robinson are acting for David Lowery in his $150m class action suit against Spotify – which isn’t going away.
The firm points out that, should songwriters agree to the NMPA deal, they will almost certainly waive their right to join Lowery or Ferrick’s class action suit.
Place your bets.
Q: What is known about the purported settlement between the National Music Publishers Association (NMPA) and Spotify?
A: Unfortunately, because this is not a court-supervised settlement, we know very little. All terms were reached behind closed doors, so we only know what was reported in the media. Some media outlets have suggested the total settlement amount, for all songwriters harmed over many the years, would be as little as $16-$25 million [Billboard has since pinned the figure at $25m].
It is important to remember that NMPA is not a party to the settlement. Therefore, it cannot bind any of its members to the settlement. At most, NMPA may recommend that its members agree to enter into the negotiated settlement with Spotify.
Q: I’m a songwriter. How do I benefit from this settlement?
A: It is impossible to determine the true benefit to songwriters because the settlement negotiations between NMPA and Spotify have been conducted without Court oversight. In stark contrast, a class action settlement requires the class counsel – the attorneys representing the songwriters – to submit the settlement terms to a Court and provide the Court with evidence that the settlement was reached in an arms-length transaction.
In other words, Courts ensure that there was no collusion in the negotiation and that the settlement is fair and reasonable to all class members. Unfortunately those safeguards are absent from the NMPA / Spotify settlement negotiations.
Q: If I accept the NMPA settlement, can I still be a part of the class action?
A: No. The NMPA / Spotify settlement will most assuredly require participants to waive their right to be part of the class action. As a result, if you accept the settlement that NMPA has negotiated, you will not be able to recover any monetary sum from the $150 Million class action suit against Spotify.
In addition, you will likely be required to waive any claims you have, or will have, against Spotify, eliminating your ability to sue them in the future.
Q: Isn’t this settlement similar to the settlement that NMPA brokered with YouTube in 2011?
A: No. Importantly, that settlement was reached as part of a class action. As such, that settlement was submitted to and approved by an independent court.
“In addition to providing an independent third party arbiter, a class action has the further advantage of narrowing the scope of the claims to the case. The NMPA / Spotify settlement will likely require songwriters to waive all rights to future action and compensation beyond the deal.
Q: Given the serious implications of accepting the NMPA settlement, what should I do?
A: Before agreeing to be a part of the NMPA/Spotify settlement, you are strongly encouraged to consult with your own counsel, or contact Plaintiffs’ Counsel on the Spotify class action lawsuit. Their contact information is below. In order to protect your songs, and your livelihood, it is critical that you carefully consider the long-term benefits of the NMPA/Spotify settlement before attaching yourself to it.
If songwriters or other potential rights holders want to know more about the class action, they can contact Michelman & Robinson, LLP attorney, Mona Hanna, at firstname.lastname@example.org.Music Business Worldwide