As if the never-ending dialogue around Spotify’s pay rates for artists couldn’t get any worse, the streaming giant has just announced it overpaid songwriters and publishers in 2018 and is seeking a refund.
“According to the new CRB regulations, we overpaid most publishers in 2018,” a Spotify spokesperson told Variety. “While the appeal of the CRB decision is pending, the rates set by the CRB are current law, and we will abide by them—not only for 2018, but also for future years in which the amount paid to publishers is set to increase significantly.”
Let’s back up a little. In early 2018, the Copyright Royalties Board mandated that royalty rates paid to songwriters in the U.S. for streaming would rise by 44% over the next four years. The ruling was issued with a notice that streaming companies had 30 days to legally oppose the ruling if they wished. Seizing on the offer, Spotify, Google and Pandora immediately appealed to the U.S. Court of Appeals for the D.C. Circuit to review the decision (which, expectedly, only added to the death match between music service providers and songwriters).
In an interview with Music Business Worldwide from March, David Israelite, President and CEO of the National Music Publishers Association, went as far to explain that Spotify and Amazon are the “bad actors” in the situation and “songwriters are important business partners to Spotify, but they’re treated instead like indentured servants.”
So—the rate determination was finalized in Dec. 2018, and Spotify specifically recouped by adding its student and family plan discounts to its payments. However, major missteps in calculating and overestimating month-to-month revenue with the new discounts in tow and playing along with the CRB’s new rates meant that the platform was overpaying songwriters and publishers.
... which means that music publishers actually owe Spotify money for 2019.
On the bright side, the spokesperson went on to explain to Variety that they’re not expecting publishers to pay up immediately, and instead Spotify has “offered to extend the recoupment period through the end of 2019 in order to minimize the impact of the adjustment on publishing companies.” However, this means that Spotify is treating the loss as an advance for 2019, and both songwriters and publishers will be seeing a cut taken from their 2019 royalty payouts.
Maybe we should’ve listened to Joanna Newsom.