The battle between Spotify and the music it plays rages on in the latest fallout between the $8.4 million on-demand streaming service and Victory Records. On October 20, Spotify pulled Victory’s catalog off of the service over disputed unpaid royalties tied to 53 million digital streams.
Because Spotify is an on-demand service, it is not regulated in the same manner as Pandora when it comes to artist and publisher royalties. Spotify pays hundredths of a cent for each stream of a song, or a percent of its revenue, to songwriters and publishers. Unfortunately, digital songs do not carry metadata about the collaborators and owners. This means that Spotify collects money to pay, but doesn’t know who to pay– and as far as past behavior is concerned, they don’t really want to know.
Most labels and publishers are cynical of Spotify’s “don’t ask, don’t tell” practices. Even is Spotify has no idea who the songwriter or publisher are for a song, they certainly know who to ask: the artist! In the case of Victory Records, however, there is an even simpler solution. Victory Records has its own publishing division and keeps a log of critical ownership information.
And now, Spotify is kicking artists like Taking Back Sunday and Hawthorne Heights off of its platform. Even though Victory Records has approached Spotify to resolve the issue, Spotify has been uncompromising.
Although Spotify is an increasingly popular service, its treatment of artists, songwriters, publishers, and labels is notoriously poor. The company’s ethics have been called into question time and time again. It has been accused of unfair compensation and abuse of technology. Artists and record labels including Taylor Swift and Jay-Z have had problems with the service and removed their catalogs. Spotify is an example of a company torn between satisfying demanding consumers who believe that ads should pay for music, and appealing to the suppliers of its products: artists, songwriters, and the like. Moving forward, Spotify has set some detrimental precedents in its relations with the music industry, and they will certainly have adverse consequences in the future.