Spotify says the platform “overpaid” royalties in 2018 — and wants the money back.
According to reports, Spotify along with Amazon, Google, and Pandora, are appealing the recent Copyright Royalty Board decision, which increased songwriter payouts by approximately 44%. Spotify was among the platforms that opposed the new rules, but wants to work those same rules to its advantage in terms of songwriter/publisher payouts.
The current rules state that the annual streaming royalty rate in the US between 2018 and 2022 should be determined at the highest outcome over three different models. One of which is based on flat rates per subscribers and is where Spotify finds these apparent “overpayments.”
(i) a percentage of a streaming company’s total revenue;
(ii) a percentage of what that streaming service pays to record labels each year;
and (iii) a flat fee per subscriber in the US.
Simply put, Spotify wants to get back millions of dollars in payouts from publishers, sourcing miscalculated subscription numbers. According to the official CRB rules, “a Family Plan shall be treated as 1.5 subscribers per month… A Student Plan shall be treated as 0.50 subscribers per month.”
The music service said in a statement: “Rather than collect the 2018 overpayment immediately, we have offered to extend the recoupment period through the end of 2019 in order to minimize the impact of the adjustment on publishing companies.”
David Israelite, the CEO of the National Music Publishers Association expressed to Music Business Worldwide: “I find it so hypocritical for a digital service that is appealing the CRB decision to then take advantage of the parts of that decision that benefit it. I guess we shouldn’t be surprised.”
So far, no word from Amazon, Google, or Pandora about any potential overpayments.
Apple Music, on the other hand, stands by the CRB decision.