Spotify reaches ‘landmark’ royalties deal with NMPA

Spotify reaches 'landmark agreement' with NMPA

Music streaming service Spotify and the National Music Publishers Association (NMPA) in the U.S. have reached a "landmark agreement" over unpaid publishing and songwriting royalties.

The deal "will allow independent and major publishers to claim and receive royalties for certain compositions used on Spotify in the U.S. where ownership information was previously unknown" the NMPA said in a statement.

The association, which represents American music publishers and their songwriting partners and aims to protect music creators' rights, said that Spotify had agreed to establish "a large bonus compensation fund that is a substantial percentage of what is currently being held by Spotify for unmatched royalties" which would create "a better path forward for finding the owners of publishing rights who should receive streaming royalties," the NMPA said.

The statement did not state how large the compensation fund would be but U.S. technology news website The Verge quoted unnamed sources as saying that Spotify will "pay out around $21 million to publishers and songwriters under the deal, with roughly $16 million set aside for royalty payments and a $5 million bonus fund for publishers and songwriters who opt in to the deal".

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The NMPA said that, for years, the issue of "unmatched works" - works that lack proper ownership information – "has made it difficult to pay timely royalties to writers and publishers."

It said the latest "groundbreaking agreement" not only facilitates the distribution of royalties to writers, but also improves processes for identifying and compensating writers for their work and establishes a better database for future payments and "will ensure that royalties are promptly paid to their rightful owners in the future."

Digital music service Spotify has come under repeated fire from some artists who have said the streaming service, which has almost 30 million paying subscribers worldwide, has not remunerated them fairly in terms of royalties per stream, an accusation that Spotify denies.

Most recently, Spotify has been the target of lawsuits surrounding unpaid royalties including a $150 million class action by a collective of musicians alleging that Spotify has knowingly and willingly reproduced and distributed their music without permission.

Reporting on that copyright lawsuit and a separate one that followed in January, The Verge said that "Spotify denies purposefully copying artists' songs for distribution without their permission but also admits that it sometimes plays songs without knowing who to pay for them, blaming the issue on a lack of accurate data." The latest deal with the NMPA goes a way to resolve that.