Music streaming giant Spotify is considering withdrawal from Uruguay over proposed amendments to music copyright law in the market.
The modifications were initiated by the Uruguayan Society of Performers (SUDEI) earlier this year, advocating for revisions to the nation’s music copyright regulations.
This week, the Parliament of Uruguay is voting on a budget bill that includes these proposed changes, Articles 284 & 285 in the Rendición de Cuentas bill.
According to local publication El Observador, SUDEI successfully lobbied for the inclusion of two articles in Uruguay’s ‘Rendición de Cuentas’—Articles 284 and 285 — through the Executive Branch of the government.
SUDEI spokesperson Gabriela Pintos told El Observador at the time that the group is not against the platforms, but is campaigning for the fair distribution of revenue.
As explained by Bloomberg Línea, Article 284 would see ‘social networks and the Internet [added] as formats for which, if a song is reproduced, the performer is entitled to financial remuneration’.
Bloomberg Línea explains further that the introduction of the broader focused Article 285 would set into copyright law the ‘right to a fair and equitable remuneration’ for all ‘agreements entered into by authors, composers, performers, directors and screenwriters with respect to their faculty of public communication and making available to the public of phonograms and audiovisual recordings’.
As reported by news outlet El Pais, Spotify sent a letter to the Minister of Education and Culture, Pablo Da Silveira in July arguing that the proposed changes imply “an additional mandatory payment for music services”.
In other words, Spotify argues that if the amendments are made, it would potentially be required “to pay twice for the same music” – a move SPOT claims could jeopardize its operations in the Uruguayan market.
“If implemented, and Spotify were forced to pay twice for the same music, it would make our business of connecting artists and fans unsustainable in this market. Spotify would then have no choice but to stop being available in Uruguay, to the detriment of artists and fans,” the company said in a statement issued to MBW.
“If these articles are included in this bill and Spotify is forced to pay twice, we will have no choice but to cease service in Uruguay.”
Added Spotify: “Spotify pays nearly 70% of every dollar it generates from music to the record labels and publishers that represent and pay artists and songwriters, and we are their largest revenue driver, having contributed more than $40 billion to date.
“And because of streaming, the music industry in Uruguay has grown 20% in 2022 alone. We want to continue giving artists the opportunity to live off their art and Uruguayan fans the opportunity to enjoy and be inspired by it.”
Spotify issued a warning in its letter to Uruguay’s Ministry of Education and Culture, cautioning of its potential withdrawal from the market if the proposed changes are enacted.
The Latin American Internet Association (ALAI) echoed Spotify’s concerns, cautioning senators that the changes could significantly impact various sectors, including civil society, the cultural industry, education, research, and technological development.
The Parliament of Uruguay is set to deliberate on the proposed changes within the budget bill this week. Spotify reiterated its stance, saying in a statement to MBW: “If these articles are included in this bill and Spotify is forced to pay twice, we will have no choice but to cease service in Uruguay.”
The development comes as Spotify continues to maintain its dominant positioning in the Latin American streaming market.
Spotify added a total of 10 million Premium subscribers globally in the second quarter, “led by Europe and Latin America,” the company said in July.
Citing IFPI data, Music Ally reports that Uruguay was the world’s 53rd largest recorded-music market in 2022, with revenues of $13.2 million (up 20.2% YoY), and that music streaming accounted for 64.4% of those revenues.
While only a smaller player in the global music business, the debate around introducing Equitable Remuneration into copyright law in Uruguay will be watched closely in other markets.
In the UK for example, the notion of introducing ‘Equitable Remuneration’ has been a matter of serious contention.
ER was previously supported by artists including Paul McCartney, Coldplay’s Chris Martin, and Stevie Nicks – but fiercely opposed by indie and major labels, who argued it would “dramatically shrink the total pool of royalties available to labels and artists”.
Applying ER to streams would align the way artists are paid their streaming royalties with the way royalties are paid to artists from radio play in the UK.
Currently, a portion (50%) of recorded music royalties from radio in the UK is paid directly to performers via a collection society – bypassing artists’ record label deals, and therefore also bypassing any recoupment charges those artists might owe their label/s for previously-paid advances.
Yet the ER system – specifically that ‘portion of royalty payments bypassing record labels’ bit – has been described by the The BPI, the body that represents major record companies in the UK, as “a recipe for disaster” that would “dramatically shrink the total pool of royalties available to labels and artists”.
In November 2021, record companies, both majors and indies, were up in arms over the suggestion from a British politician, in a draft Bill titled Copyright (Rights and Remuneration of Musicians, Etc), that ‘Equitable Remuneration’ should be introduced into UK law.
That so-called ‘Brennan bill’ was rejected by the British Parliament in early December 2021.
Music Business Worldwide