Spotify is demanding refunds from the artists it “overpaid” in 2018
Another day, another PR bungle from the world’s streaming giant.
For all of the brilliant innovations that Spotify has brought to the world of streaming, it sure has bungled the whole “working with artists” part of its business model.
After the U.S. Copyrights Royalty Board voted to increase songwriter payouts by 44% last year, the company was one of the first (alongside Google, Amazon, and Pandora) to file an immediate appeal of the decision. Because why pay the people your platform depends upon what they’re worth, amirite?
Now, Spotify is claiming that, despite the new ruling, it actually overpaid many of its publishers in 2018 and would like its money back, please.
In a statement released to Music Business Worldwide, a Spotify spokesperson 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.”
How could Spotify make such an audacious claim? Semantics, of course! The A.V. Club offered a breakdown of the new payout structure:
The new ruling provides streaming platforms with three different models for determining royalty rates, of which the platform would pay according to the highest payout. One model uses a flat rate per subscriber, equating premium family plans to 1.5 users and deeply discounted student plans .5 of a subscriber. Based on this math, Spotify is claiming to have overpaid by millions.
So yeah, Spotify may technically be in the right to request this refund, but the timing sure makes it seem like the streaming giant is out to ring every cent out of the very people who make its business sustainable. When coupled with its bungled “hateful content” policy last year, it’s safe to say that Spotify is batting 0 for 2 from a PR standpoint.
And go figure, people are pissed
David Israelite, the CEO of the National Music Publishers Association, has been rallying against Spotify ever since it first appealed the CRB’s ruling, claiming that it was “declaring war” on the songwriting community in doing so. Following the company’s most recent decision, Israelite again went on the offensive.
“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,” he said. “I guess we shouldn’t be surprised.”
“Spotify is once again showing its true colors,” said another music industry source. “It’s just a heartless tech company that doesn’t really care about artists.”
What do you think? Is Spotify in the wrong to ask for money? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.
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