Spotify Hit With FTC Complaint by Songwriters Association Over Royalties
Songwriters Association Files Spotify FTC Complaint:
The National Music Publishers’ Association (a trade organization that represents songwriters and music publishers) "filed a complaint with the US Federal Trade Commission on Wednesday about Spotify Technology SA's decision to provide audiobooks to subscribers, which resulted in reduced royalty payments to songwriters," according to Ashley Carman of Bloomberg. "The audiobooks addition gave Spotify leeway to reclassify its premium subscription offering as a 'bundle,'" Carman added. "Under a complicated system set by the US Copyright Royalty Board, that qualifies Spotify to pay a discounted rate to songwriters since it's now paying for the licensing of books and music under the same subscription price." Furthermore, the NMPA "alleges in its complaint that the bundle is unlawful since subscribers were automatically rolled in, with no option to remain on a music-only tier, which doesn’t yet exist in the US. [...] Payments to songwriters could drop by around $150 million over the next year as a result." In a letter to FTC Chair Lina Khan (an influential legal scholar in the antitrust-oriented New Brandeis movement), the group contended that the "bait-and-switch subscription scheme is 'saddling' shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase, [costing] consumers millions of dollars, [undermining] the music royalty system, and [harming] competition." The complaint also was forwarded to potentially amenable attorneys general in the key loci of the American music industry (including New York, Tennessee, California and Illinois) alongside several consumer advocacy organizations. "We notify users a month in advance of any price increases and offer easy cancellations as well as multiple plans for users to consider," a Spotify spokesperson said in response to the complaint. "In short, we categorically reject the NMPA's baseless accusations." The complaint follows a similar lawsuit against the digital platform from the Mechanical Licensing Collective, which functions as a "royalty collection service," according to Carman. In addition, the NMPA "sent a cease-and-desist letter last month over products it claims are infringing on songwriters' copyrights," including music videos, lyric readers and podcasts. "Before Spotify’s 'bundling' betrayal, we may have been able to work together to fix this problem, but they have chosen the hard road by coming after songwriters once again," said David Israelite, the NMPA's chief executive officer of the NMPA, in a statement last month. At the time, Spotify characterized the letter as a "press stunt filled with false and misleading claims."