Spotify's former licensing head claims platform “deprives” publishers and songwriters of royalties

Ex-Global Head of Publisher Licensing at Spotify, Adam Parness has shared his thoughts on the streaming service’s latest subscription changes, labelling them "misguided and unfair."

In a column for Billboard, Parness claims that Spotify’s new “bundled subscription” is an “ill-informed attempt to deprive songwriters and music publishers of their rightfully earned U.S. mechanical royalties.”

Introduced in March, the new change has premium individual, duo, and family subscriptions now have access to audiobooks which many argue is a “bundled subscription”.

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In 2022, Spotify signed a legal settlement - Phonorecords IV - with music publishers and other music streaming services to agree that those introducing a “bundle” service in the US are “permitted to pay a lower mechanical royalty rate to publishers and songwriters than standalone music subscription services.”

With Spotify adding audiobook access to its standard subscription, some claim that the 2022 settlement would name the subscription a “bundle”.

Last week according to Music Business Worldwide, The Mechanical Licensing Collective (The MLC) - a non-profit organisation - filed a lawsuit against the US Spotify alleging that the streaming giant is underpaying royalties now that it has changed its subscription plans.

Sony Music Publishing is also considering legal action against Spotify over this recent change as it also alleges that the new system limits royalty payments in the US.

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Parness shares: “The agreed-upon revenue share rate for Spotify premium, currently 15.2%, may effectively be reduced to less than 12%, depending upon a number of factors."

Losses to songwriters and publishers, estimated by Billboard to be $150 million on an annualised basis, will undoubtedly increase over time as subscription revenue and users grow," He adds.

“This is a respectful appeal to the company, specifically its senior leadership team, to do the right thing by songwriters, regardless of what strategies they appear to believe are legally permissible.”

[Via: Billboard]

Becky Buckle is Mixmag's Multimedia Editor, follow her on Twitter