Spotify has agreed a settlement deal with the National Music Publishers’ Association (NMPA) which will ‘allow independent and major publishers to claim and receive royalties for certain compositions used on Spotify in the United States where ownership information was previously unknown’.
The NMPA says that agreement – which comes after two $100m+ class action lawsuits against Spotify over alleged unpaid mechanical royalties – establishes a ‘large bonus compensation fund that is a substantial percentage of what is currently being held by Spotify for unmatched royalties’.
UPDATE: Billboard sources place the total NMPA settlement at $30m, comprised of $5 million in damages on top of a $25 million pool that Spotify owes music publishers and songwriters for unclaimed works.
In addition, the NMPA said the deal would ‘create a better path forward for finding the owners of publishing rights who should receive streaming royalties’ by ‘improving processes for identifying and compensating writers for their work and establishing a better database for future payments’.
The entire industry, says the NMPA, will be able to ‘fill in the gaps in ownership information, which help to ensure that royalties are promptly paid to their rightful owners in the future’ – a reference to the Global Rights Database-esque project which Spotify is building internally.
David Israelite, NMPA
Any royalties associated with works that remain unmatched after each claiming period will be distributed to publishers and songwriters who participate in the settlement, but the agreement will not affect the royalties owed to any publisher or writer who does not choose to participate.
National Music Publishers’ Association President and CEO David Israelite said: “NMPA’s goal has always been to ensure publishers and songwriters receive the money they deserve. I am thrilled that through this agreement both independent and major publishers and songwriters will be able to get what is owed to them.
“We must continue to push digital services to properly pay for the musical works that fuel their businesses and after much work together, we have found a way for Spotify to quickly get royalties to the right people. I look forward to all NMPA members being paid what they are owed, and I am excited about the creation of a better process moving forward.”
Spotify Global Head of Communications and Public Policy Jonathan Prince said, “As we have said many times, we have always been committed to paying songwriters and publishers every penny.
“We appreciate the hard work of everyone at the NMPA to secure this agreement and we look forward to further collaboration with them as we build a comprehensive publishing administration system.”
In summary (and in the NMPA’s words) the agreement:
- Includes payment of bonus compensation.
- Provides the ability to easily identify and properly claim “unmatched” works online.
- Ensures that Spotify will continue working with the NMPA and its members to implement practices that will allow Spotify to match works more accurately and efficiently.
- Where ownership has not been identified or claimed by publishers, there will be a distribution to publishers and songwriters of royalties held by Spotify based on known usage on Spotify’s service.
- Provides a path to direct licensing between Spotify and publishers, with the goal of strengthening business relationships.
Music Business Worldwide