Swedish Artists Looking To Take Labels To Court Over Spotify Royalties

from the surprisingly,-spotify-is-not-the-villain-here dept

A couple of major labels and Spotify are headed for a legal showdown, but not the way anyone would first assume -- and in, of all places, Sweden, where Spotify has enjoyed tremendous success. This isn't friction between Spotify and major labels coming to a head, but rather artists taking on the labels for devouring a majority of Spotify's payouts. It goes beyond inequitable royalty distribution, though. Those bringing the lawsuit are also accusing the labels of granting themselves rights they never had and infinitely extending those they do.

Even Thom Yorke can’t pull his old Radiohead classics from Spotify, because the label has those rights. But what if that isn’t quite true? That’s the question now being tested by Per Herrey and the Swedish Musicians’ Union, Svenska Musikerförbundet. The threatened lawsuits, first reported by Sveriges Radio in Stockholm, allege that labels are not only screwing artists, but extending digital streaming rights that they simply don’t have.

Herrey points to possible legal action against Universal Music Group and Warner Music Group, both majors that have received massive advances and equity shares from Spotify while passing little on to artists.
It's been argued several times on this site that Spotify's royalty payments, which are portrayed by its opponents as insultingly low, aren't truly or completely its fault. Someone's taking a huge portion of those payouts before they hit the artists. Spotify pays out over 70% of its revenue in royalties, a percentage the labels certainly aren't willing to match. Herrey compares the payout artists receive from their labels -- which he estimates is only 6-10% of what's collected from Spotify -- to the normal radio payout, which is split 50/50. A streaming service comprised of mostly non-paying members is going to be hard-pressed to generate sizable artist incomes, but the labels' ability to grab 90% of the payments makes it impossible.

The additional accusation suggests the labels are working to make this situation even worse. According to Herrey, labels are crafting digital rights ownership out of thin air, especially on older, long-running contracts. Herrey suggests the labels should remove all digital works until these contracts can be renegotiated to deal with the shift in content consumption.

Herrey's suggestion (and planned lawsuit) can probably be traced back to Eminem's successful suit against UMG. UMG had been (and likely still continues to do so) playing terminology games in order to maximize its share of royalties from iTunes. UMG called these "sales" in order to claim 85% of the royalties. Eminem's legal team called them "licenses," which would have meant Eminem was due 50% of each sale/license. As anyone who's seen the amount of restrictions applied to your "purchase" of a track from iTunes can attest, you're not really "purchasing" these songs from iTunes -- you're merely "renting" them. Any right of first sale does not apply to most digital goods. Hence, a "license" rather than a "sale."

If UMG's shifty semantics are any indicator of common major label tactics, there's little doubt the digital rights conjured up have been been severely tilted in the labels' favor. And if Herrey's statement about the 6-10% trickle-down from Spotify is correct, then the labels are utilizing some very generous contractual language that somehow views a streamed song as a "sale." Or, perhaps, it doesn't address it at all and hopes the affected artists won't notice.

Filed Under: artists, labels, royalties, sweden
Companies: spotify


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  1. icon
    PaulT (profile), 30 Oct 2013 @ 8:34am

    Re: Re: And now some real numbers for stoner "S. T. Stone"

    "You don't even bother with real numbers!"

    So, we can add "hypothetical" to the words you don't understand? You're free to provide a list of actual numbers, complete with citations, if you wish and we'll use them. Your corporate friends keep these secret for a reason (hint: so they can effectively rip the artists off ).

    "Actually, with a semi-valid rate of 0.42 cents (that I saw in one link)"

    Which link? How does this compare to a comparable alternative such as per-listener rates for radio airplay? If they're the same, why is it only suddenly a problem now after decades of radio services? If they're different, why?

    Come on, you nearly stated a fact, let's see if you can keep up with that inadvertent attempt at intellectual honesty.

    "Lowery’s assertion"

    Given his track record, I'll assume anything after this phrase is a distortion or outright falsehood. Do you have any sources not relating to a known liar?

    I assume not, since you've used a story about how your friends in the legacy industry are ripping artists off again to go on another moronic rant about someone else. Why are you scared to address honest arguments with relevant facts?

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