Spotify: Singing the streaming blues

At the end of December, Wixen Music Publishing filed a claim for copyright infringement against streaming service Spotify, to the tune of $1.6 billion. This lawsuit is just one of many that Spotify has been hit with since launching nearly ten years ago.

The Spotify squabble demonstrates the challenges that rights owners such as creatives, publishers, and record labels face in the digital age. While Spotify has agreements in place with record labels relating to sound recording copyright, Wixen’s complaint alleged that the company failed to obtain the equivalent rights for the compositions of that music.

Licensing music can be a complex process and often requires the consent of multiple right owners. As Neil Parkes, partner at UK law firm Foot Anstey, explains, “A music track or record in the form which it is listened to by the public is made up of many individual parts.” These parts include the creative work as well as the monetary investment behind it, and may involve a host of individuals and corporations.

However, Parkes claims that “copyright law has long provided protection for the different constituent parts of music and sound recordings”, which generally have different owners. That platforms such as Spotify should obtain consent from these different owners is not a new requirement, regardless of any technical advancement.

“The issue in the Spotify case is not one of the law failing to keep pace with technological development,” he adds.

The digitisation of music provides consumers easier legal access to music than ever before. But as the industry diversifies and develops in the digital marketplace, right owners may not be benefiting fairly or proportionally from having their content hosted on streaming platforms.

Artists have previously boycotted Spotify on the grounds that musicians who are creatively responsible for the tracks are not justly remunerated. However, whether such grievances are the fault of streaming services is questionable.

Parkes explains that most music available via streaming services is a result of licensing agreements between the recording artist and a record label. Generally the former grants the latter an exclusive licence to make and exploit music recordings.

Consequently the record label owns the copyright and is able to grant streaming services, such as Spotify, licences to host the music. As such “the label will be responsible for making payment of the artist’s share” in line with the terms of recording agreement, rather than Spotify needing to remunerate the artist directly.

More respect for IP?

Whether lawsuits like this one will have an impact on how streaming services manage the IP aspect of their work has yet to be seen.

Parkes is sceptical; he says in its keenness to make more music available to listeners, Spotify appears to have given up trying to identify and trace co-owners of the copyright in the compositions. However, regardless of any lawsuit, it will have retained a proportion of the royalties in reserve, so “the payout of those reserves in settlements will unlikely have any lasting impact”, he continues.

In 2017 Spotify settled a class action lawsuit with songwriters for $43 million, after being accused of hosting their music without a licence or royalty agreement. Despite being unable to steer clear of being sued Spotify continues to grow, and is expected to make an entrance on the stock market later this year (Spotify’s market value will sing to the tune of $20 billion when it goes public, according to one estimate).

There is also the argument that perhaps Spotify’s vast music library is really benefiting the music industry, by migrating users away from piracy.

“The move from physical music formats to digital has been a double-edged sword,” says Parkes. The wide availability of free, or reasonably priced, content is arguably what most consumers want. On the other hand, the development of technology used to distribute or share music files undoubtedly contributes to what Parkes describes as a “significant rise in music piracy”.

He adds a caveat. “While the music industry as a whole was initially slow to embrace and adopt technological developments and the resulting new distribution and consumption models for the distribution of music, services such as Spotify have undeniably helped to drive consumers to use lawful services and decreased the inclination to access music illegally.”

Spotify facts