Spotify says it can’t pay songwriters better royalty rates. It’s also spending $320 million on a Barcelona sponsorship deal.

Credit: Felipe Queiroz / Shutterstock
Will Spotify's logo soon be splashed across Barcelona's famous shirt?

“It’s natural for everyone to want a bigger piece of the pie. But that cannot come at the expense of continuing to grow the industry via streaming.”

So said Spotify in 2019, when trying to convince US songwriters that its legal appeal against their recently-mandated pay rise from streaming wasn’t actually the economic equivalent of jamming a rusty coat hanger into their unmentionables – it was, in fact, simply the fair and pragmatic thing to do.

The intimation in Spotify’s words, there? There isn’t enough money in the current ‘streaming’ pie structure for songwriters to get paid more, without hurting Spotify’s own ability to operate successfully..

This argument was even made clear in a 2016 submission from Spotify’s Paul Vogel to the Copyright Royalty Board, in which he said – stunningly direct quote – “lower royalty rates are critical to Spotify’s future”.

Since Spotify’s 2019 statement, its attempt to claw back money from songwriters in the US has gone to the next level.

SPOT’s initial appeal against the US songwriter pay rise, as adjudged by the Copyright Royalty Board, covered the years from 2018 from 2022.

But in October 2021, it became public knowledge that Spotify was now also trying to suppress songwriter streaming pay rates for the following five years (2023-2027), too.

In both cases (2018-2022; and 2023-2027), Spotify wants to keep songwriter pay at just 10.5% of its service’s revenues (with additional ‘carve out’ deductions thrown in for the latter period).

That’s around a third of what Spotify itself keeps from its subscription and ads income (i.e. a 30% cut). And it reflects a songwriter royalty rate that Warner Chappell‘s Guy Moot and Carianne Marshall yesterday (February 7) branded “appallingly low”.

So, remember: Spotify says it can’t spare any more money to pay songwriters a better royalty rate.

Indeed, it argues that not doing so is such an essential red-line, it’s literally “critical” to its company’s future.

Now, on to some totally unrelated news: Spotify is reportedly on the verge of striking a deal to splurge USD $320 million (€280m) on a new sponsorship agreement with Spanish soccer team Barcelona.

According to the Guardian, the agreement would see Spotify’s logo splashed across Barca players’ shirts, and would also come with naming rights for the historic Barcelona stadium, the Camp Nou.

The Spotify deal is expected to be announced this week, and will then come into effect this summer after Barcelona’s contracts with their primary sponsor, Rakuten, and secondary sponsor, Beko, both end.

Amid Spotify’s reported negotiation with Barcelona, the club’s CEO, Ferran Reverter, this week resigned “for personal and family reasons”.

MBW is unaware of Reverter being a credited songwriter on any significant pop compositions.

Spotify last week announced its Q4 2021 results.

It confirmed that its Premium Subscriber base grew to 180 million at the close of December.

That was up by 8 million subscribers (5%) on the 172 million that the company counted at the end of the prior quarter (Q3 2021)Music Business Worldwide