Spotify is “Effectively Suing Songwriters”
Yesterday (March 7), it emerged that four major owners of digital music services – Spotify, Amazon, Google and Pandora – had lodged legal appeals against the US Copyright Royalty Board’s recent decision to raise streaming royalties for songwriters (and music publishers) by 44%. That royalty rise, which previously looked locked in, is now in serious jeopardy.
Apple Music, in contrast, has accepted the new rates, and declined to challenge what’s viewed as an important pay hike for songwriters.
Remember when Kendrick Lamar and (reportedly) other artists threatened to pull music from Spotify over the arbitrary ‘hate conduct’ ban policy? Spotify quickly backtracked. This might be another opportunity for artists to show Spotify and the streaming industry who really needs who more.
And, as with privacy, Apple continues to brand themselves as the company that does the right thing. I’ll contain my cynicism (which I have for any corporate organization) and say ‘good on them.’
🔗→ Wait… Spotify is ‘suing songwriters’? What the heck is going on?
Download sales are in a free-fall as acceptance of music streaming continues to grow. If you’re in the dance music industry, you might feel some immunity (at least for now) as DJs are your primary customers. And DJs have to download, right? They still need the digital files on a USB, or a CD if they’re (ahem) old school. Well …
Dance music download platform Beatport has acquired Pulselocker, the DJ-centric streaming service that ceased operations late last year.
Pulselocker allowed DJs to access music to include in their sets. It integrated with various DJ software and hardware systems, worked offline, and reported usage back to rights owners. As a result of the deal, Beatport plans to utilise Pulselocker’s patented technology within its own planned streaming service later this year.
Coverage of this acquisition has noted that Beatport previously attempted a streaming service and failed. But it’s easy to see that the plan here is much different. While Beatport’s earlier streaming ambition was to be like a dance music Spotify, the Pulselocker acquisition promises something new: a subscription streaming service for DJs.
I remember once terrifying a DJ friend of mine with the prediction of a ‘Wi-Fi CDJ’ that would access the DJ’s library from the cloud. The result is not that much different than inserting a USB, really — the DJ would be found scrolling through song titles on the CDJ’s screen and queuing selected tracks for play. It made sense for this prediction to be subscription-based, and for the DJ to be able to organize the catalog with folders and tags beforehand using an app. There would also be an offline element in case the network connection got spotty. My friend was worried as this alternate future killed dance music’s market for downloads.
But the last market flying the flag of paid downloads isn’t as healthy as we’d like to believe. DJs are a tribal group, bonding tightly over music and club life. The thought of piracy may not ever enter their minds but sending MP3 copies of a dozen hot tracks to a DJ buddy is an acceptable notion. The dance music world is also rooted in an often desperate promo culture, with labels sending links to free downloads of the latest release to hundreds (sometimes thousands) of tastemakers in one go. Don’t get me wrong — many DJs are still buying downloads, but many others are incentivized not to.
The streaming DJ set-up is disruptive and offers an alternative. The convenience of instantly adding to one’s library transforms copying and sharing amongst DJs into recommending. And I can also see promo services doing deals with Beatport or other streaming-for-DJ services, allowing private ‘lockers’ of pre-release music accessible only through invitation.
There is an issue of bandwidth and audio quality. Discerning DJs prefer the uncompromised quality of a WAV or AIFF audio format, which means large file sizes. But bandwidth and speed are always getting better, and I can imagine these futuristic CDJs utilizing a cellular network in addition to Wi-Fi internet, or can be reliably wired in by ethernet or other systems. There’s also the offline option, and I guess that libraries would be downloaded ahead of time into temporary onboard memory – or transferred to a USB for backup – in case of network failure. If this all works as planned then why even play MP3s? The DJ has the preferable WAV or AIFF option at her fingertips (or, likely, a future lossless format devised for streaming DJs) so why settle for inferior sonics? The overall sound of clubland improves.
For labels and self-releasing artists, the available data will be mind-blowing. Theoretically one could check stats on a Monday morning to see how many times a track got played over the weekend, in what cities, and maybe even — if these future CDJs are geo-located — what clubs. There’s also a payment to labels per play which might mirror Spotify’s subscription model (though I hope Beatport considers adopting a subscriber share model). At first, this may seem a severe downgrade from download income, but when one considers the decline in shared MP3s and the potential monetization of promos (not to mention the improved potential for discovery), then things get a little rosier.
Another factor making a difference is the conceivable ease of reporting venue play for performance royalty collection. Ideally, I’d like to see the streaming service or even the CDJ itself automatically report the set list to performance rights organizations. If that doesn’t happen, then the DJ or venue can easily output a list of the songs played during a set for online submission. This innovation, coupled with the advent of audio fingerprint technology in play identification (already being tested in a handful of countries such as Germany and the UK), helps solve the longstanding problem of inaccurate distribution of venue-related performance royalty. Historically, a nightclub’s yearly license payment to a performing rights organization (such as BMI and ASCAP) goes to an assumed pool of top-tier artists, no matter the music policy of the club. These technological solutions would radically change the landscape, and non-mainstream clubs could finally see their mandatory licensing fees going to underground artists. So, in the near future, a dance music producer could find direct income from DJ play via streaming subscriptions and venue performance royalty.
It’s inevitable that DJs will use streaming or cloud-based services as their ‘record crates’ (well, save for the vinyl hold-outs — like me). DJs are not strangers to disruption, having transitioned from 12”s to CDs to USB sticks to laptops in just over thirty years. But this is the big one, changing how we select, promo, discover, collect, play, and monetize. The art of DJ’ing responds to the technology so it will be interesting to see how this next step affects the DJs, their ingenuity, and the sounds they play.
Lots of confused, angry, and wide-eyed rumblings due to Spotify’s latest legal pronouncement. The Hollywood Reporter explains:
What {Frankie Valli and the Four Seasons member Bob} Gaudio’s lawsuit alleges — as did the prior class action — is Spotify is violating the reproduction rights of publishers and songwriters. Those making a mechanical reproduction of a musical composition can obtain a compulsory license and bypass having to negotiate terms with publishers. However, those doing so have to follow certain protocol like sending out notices and making payments. The lawsuit claims that Spotify hasn’t done an adequate job of doing this.
In the past, Spotify has pointed to the difficulty of locating the co-authors of each of the tens of millions of copyrighted musical works it streams. It fought the class action mainly on jurisdictional grounds as well as challenging whether the lawsuits were ripe for class treatment. But Spotify seems prepared to go another step and set off a legal firestorm by now challenging what rights are truly implicated by streaming.
“Plaintiffs allege that Spotify ‘reproduce[s]’ and ‘distribute[s]’ Plaintiffs’ works, thereby facilely checking the boxes to plead an infringement of the reproduction and distribution rights,” states a Spotify motion for a more definitive statement from the plaintiffs. “But Plaintiffs leave Spotify guessing as to what activity Plaintiffs actually believe entails ‘reproduction’ or ‘distribution.’ The only activity of Spotify’s that Plaintiffs identify as infringing is its ‘streaming’ of sound recordings embodying Plaintiffs’ copyrighted musical compositions.”
Spotify is implying that digital streaming doesn’t entail reproduction; thus the service never owed mechanical royalties in the first place. If you’re confused (and that’s understandable), Complete Music Update gives a solid explainer:
In music, and especially music publishing, a distinction is commonly made between the reproduction and distribution controls – often referred to as the ‘mechanical rights’ – and the performance, communication and making available controls – commonly referred to as the ‘performing rights’.
When you press a CD you exploit the mechanical rights but not the performing rights. When you play a song on the radio you exploit the performing rights but not the mechanical rights. But what about digital?
Copyright law doesn’t usually state which controls the digital transfer of a song or recording exploits, though generally the music industry has treated a digital delivery as both a reproduction and a communication (or a reproduction and a making available) at the same time. A download only exploited the mechanical rights, while a personalised radio service like Pandora or iHeartRadio only exploited the performing rights. However, with on-demand streaming of the Spotify variety, it has generally been accepted that both the mechanical and performing rights are being exploited.
(The full CMU explainer is worth a read.)
I admit, applying mechanical royalty to digital streaming seems a stretch at first. But what’s important to remember is mechanical royalty is not meant to be tied to purchase or the consumer acquiring the duplicated composition. For example, if a label manufactures 1000 CDs then mechanical royalty must be paid for all 1000 copies, even if only 50 sell.
Technically, streaming does require a download, though that download is immediately deleted from the device’s RAM. So, even though the listener isn’t purchasing or acquiring the song, there is a duplication taking place.
This does get tricky when one examines the separation of radio-style services (such as Pandora’s traditional streaming ‘stations’ and iHeartRadio) and on-demand streamers (Spotify, Apple Music). I don’t know the technical specifics, but doesn’t a Pandora ‘station’ download the file to a device’s RAM as well? Almost every other country in the world seems to think so, as the US is an outlier in excluding digital radio-style services from mechanical royalty payment.
If the issue of mechanical royalty and streaming goes to court, it will be watched very carefully as the precedent set either way would be monumental.
Spotify has already paid out tens of millions in settlements over unpaid mechanicals which is likely to be seen as an admission of guilt, hurting the chances of the ‘we should be exempt’ argument. So the money is on the status quo. Regardless, songwriters have a right to be concerned. The line taken by Spotify’s lawyers reveals that the company believes writers should be paid even less than they presently are.
