Spotify says it “overpaid” songwriters & publishers in 2018, wants money back
The low per-stream rate Spotify pays, which is reportedly between $0.006 to $0.0084, split between those with rights to the track, has long drawn criticism, and even moreso when the company filed an appeal against the US Copyright Royalty Board's (CRB) decision to raise pay. Songwriters and publishers would see per-stream royalties increase 44% over the next five years under the CRB's new rules, something which Spotify claims would be detrimental to "both music licensees and copyright owners." The streaming service's latest move isn't likely to win it any support from either group; Music Business Worldwide reports that Spotify is now saying that they actually overpaid publishers, and in turn, songwriters, in 2018. A spokesperson for the streaming service told Music Business Worldwide, "according to the new CRB regulations, we overpaid most publishers in 2018. While the appeal of the CRB decision is pending, the rates set by the CRB are current law, and we will abide by them – not only for 2018, but also for future years in which the amount paid to publishers is set to increase significantly. 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."
More from Music Business Worldwide:
It turns out, however, that there was some additional and under-reported complexity to the CRB decision concerning Spotify’s student discount offers and its family plan bundles – which allow up to six family members to stream Premium Spotify for a single price of just $14.99 a month.
Because of this additional complexity, Spotify has now calculated that, retrospectively, according to the CRB decision, many music publishers actually owe it money for 2018, due to an overpayment based on the prior rates.
The CRB rules that the annual streaming royalty rate in the States between 2018 and 2022 will be determined by the highest outcome across one of three different models: (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.
Within the new CRB-approved regulations for streaming payouts, it says: “A Family Plan shall be treated as 1.5 subscribers per month, prorated in the case of a Family Plan Subscription in effect for only part of a calendar month. A Student Plan shall be treated as 0.50 subscribers per month, prorated in the case of a Student Plan End User who subscribed for only part of a calendar month.”