SMP WEIGHS IN ON SPOTIFY BUNDLE ROYALTY DEBATE

In the wake of the National Music Publishers' Association sending Spotify a cease-and-desist over whether the content available in its premium subscription plans is being licensed properly and/or at the correct royalty rate, Sony Music Publishing Chairman/CEO Jon Platt has weighed in on the issue in a letter obtained by HITS.

"Until recently, Spotify was paying songwriters at the improved headline rate that was agreed upon in the last U.S. Copyright Royalty Board (CRB Phono IV) proceeding in 2022," Platt wrote. "Late last year, Spotify added an audiobook offering to its premium subscription tier in the U.S. and across several other markets. Spotify then unilaterally reclassified their subscription product as a bundle. They claim this enables them to pay a reduced mechanical royalty rate. In effect, Spotify is taking the position that all U.S. subscribers are part of a bundle without choosing the bundle option."

Once Spotify started paying royalties at that discounted rate in March, it reduced its U.S. mechanical royalty payments to songwriters "by approximately 20%," per Platt. "We do not agree with Spotify’s position. While the CRB rate structure allows for a discounted bundle rate in certain circumstances, we do not believe this offering falls within the parameters that were agreed to in the last CRB proceeding."

Noting that the Mechanical Licensing Collective (MLC) has filed a lawsuit challenging Spotify’s decision, Platt says SMP is working with the NMPA to consider "all options to enforce the improved rates that were achieved in CRB Phono IV."

Spotify called the NMPA's cease-and-desist "a press stunt filled with false and misleading claims" that attempts "to deflect from the Phono IV deal that the NMPA agreed to and celebrated back in 2022. We paid a record amount to benefit songwriters in 2023, and we are on track to exceed this amount in 2024."