Spotify and the National Music Publishers’ Association (NMPA) have struck a deal that sees the launch of a new Opt-In Portal for NMPA members to “enter into a direct license agreement for expanded audiovisual rights in the US”.
According to a press release issued today (November 11), these new agreements will result in “higher royalty payouts for independent music publishers and songwriters, and in exchange, Spotify will receive new rights to build video features that better connect artists and fans”.
The Opt-In Portal is open as of Tuesday (November 11), and onboarding will continue until December 19, the NMPA said in a statement.
“This new partnership with the NMPA will increase revenue for songwriters and independent publishers who are the heart of the industry.”
Alex Norström, Spotify
“This new partnership with the NMPA will increase revenue for songwriters and independent publishers who are the heart of the industry,” said Alex Norström, Spotify’s Co-President and Chief Business Officer, and soon-to-be Co-CEO.
“We look forward to continuing to work with the NMPA to create new value and opportunities for their members.”
“We are pleased that this deal offers indie publishers the chance to enter into direct deals with Spotify in regard to audiovisual streaming functionality on the platform alongside the recently announced larger publishing companies,” added NMPA President and CEO David Israelite.
“This new income stream reflects the growing value of songs as digital platforms offer new capabilities to consumers.”
“This new income stream reflects the growing value of songs as digital platforms offer new capabilities to consumers.”
David Israelite, NMPA
Spotify has signed licensing deals with all three major music companies this year: Universal Music Group, Sony Music, and Warner Music Group, which included direct publishing deals for the US. Each of the press releases announcing those deals referenced audio-visual content.
BMG and Kobalt also struck direct deals with Spotify in the US this year, with the announcement for the latter agreement pointing to “a licensing framework to enable new formats, innovations, and potential to connect creators and fans alike”.
One particular “new format” not yet available on Spotify in the US is music videos.
The company initially launched music videos in beta in March 2024 in 11 countries – the UK, Germany, Italy, the Netherlands, Poland, Sweden, Brazil, Colombia, the Philippines, Indonesia and Kenya. It later added Egypt to the list.
The platform then expanded music video streaming to 85 new markets in October 2024, but the US wasn’t included. Today’s news could signal that Spotify is planning to introduce music videos to its US users soon.
The NMPA’s cooperation with Spotify on the opt-in program doesn’t include a resolution to the ongoing dispute between US publishers and Spotify over the streamer’s decision last year to bundle music and audiobook services in the US, thereby allowing it to pay out lower mechanical royalty rates.
The move stemmed from a 2022 US Copyright Royalty Board ruling on statutory precepts called “Phonorecords IV,” which established that bundled multimedia services could pay a lower mechanical royalty rate than standalone music subscription services.
Spotify subsequently added audiobooks to its Premium music service and claimed this qualified as a “bundle,” allowing it to cut mechanical royalty payments to publishers and songwriters in the US.
The move began affecting payouts in Spring 2024, and attracted legal action from the Mechanical Licensing Collective (MLC), which filed a lawsuit against Spotify in May 2024. The MLC was allowed to refile the suit last month, after it was initially dismissed in January.
They added: “That fight continues in the MLC’s lawsuit in federal court, in the NMPA’s complaint to the FTC, and in the upcoming Copyright Royalty Board proceeding which begins in less than two months.”
It’s likely that in those proceedings – expected to result in the Phonorecords V agreement on the mechanical royalty rates paid to publishers and songwriters by streaming services – publishers will be seeking to eliminate the clause in the current Phonorecords IV that allows digital service providers to pay out lower mechanical rates for bundled services.
The various direct licensing deals that Spotify signed for the US this year – including deals with Universal Music Publishing Group, Sony Music Publishing, Warner Chappell, BMG, and Kobalt moved the companies’ agreements with the platform beyond the traditional CRB model in the US.
According to Spotify, this means that the remuneration resulting from direct licensing deals, combined with the MLC payouts that publishers continue to receive from the blanket mechanical license, will result in higher royalties for songwriters than standalone payouts from MLC under the audiobook bundle treatment.Music Business Worldwide
