Streaming giant Spotify has claimed that it has overpaid royalties to publishers and they are now seeking a refund.
Spotify is currently involved in a legal appeal against a recent ruling by the Copyright Royalty Board (CRB). The ruling, which agreed to increase streaming royalty rates for artists by 44%, was challenged earlier this year (March 10) by Spotify (along with Amazon, Goole and Pandora), a move which The National Music Publishers Association (NMPA) described as “shameful” and tantamount to “suing songwriters” back in March.
Whilst their appeal against the 44% increase is still going ahead, Spotify are now also attempting to use the new rules to their advantage by claiming that the Copyright Royalty Board’s figures means they have actually overpaid publishers. They are now demanding a refund which will amount to millions of dollars in payouts from publishers.
A spokesperson for Spotify said: “According to the new CRB regulations, we overpaid most publishers in 2018. 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.
“Rather than collect the 2018 overpayment immediately, we have offered to extend the recoupment period through the end of 2019 in order to minimize the impact of the adjustment on publishing companies.”
Speaking to Music Business Worldwide (MBW), David Israelite, CEO of the National Music Publishers Association said: “I find it so hypocritical for a digital service that is appealing the CRB decision to then take advantage of the parts of that decision that benefit it…I guess we shouldn’t be surprised.”
Another “senior figure” in the music publishing industry reportedly told MBW: “Spotify is clawing back millions of dollars from publishers in the US based on the new CRB rates…while appealing the [wider CRB decision]. This puts some music publishers in a negative position. It’s unbelievable.”
In an official statement about the original ruling earlier this year, Israelite said: “When the Music [Modernisation] Act became law, there was hope it signalled a new day of improved relations between digital music services and songwriters.”
“That hope was snuffed out today when Spotify and Amazon decided to sue songwriters in a shameful attempt to cut their payments by nearly one-third…The Copyright Royalty Board’s (CRB’s) final determination gave songwriters only their second meaningful rate increase in over 110 years.”
He continued: “Instead of accepting the CRB’s decision which still values songs less than their fair market value, Spotify and Amazon have declared war on the songwriting community by appealing that decision…No amount of insecure and hollow public relation gestures such as throwing parties or buying billboards of congratulations or naming songwriters ‘geniuses’ can hide the fact that these big tech bullies do not respect or value the songwriters who make their businesses possible.”