Following Spotify Removals, Victory Considers Laying Off Employees

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“They are going to force me to drop artists and lay off staff.”

Last month, Spotify started removing bands like Hawthorne Heights, Thursday, and Streetlight Manifesto, thanks to a royalty dispute with Chicago-based label Victory Records.  Now, Victory employees may start losing their jobs as a result, according to label founder Tony Brummel.  “Spotify is over 70 percent of our monthly digital sales,” Brummel wrote in an email to multiple recipients, one subsequently published by the International Business Times.

“They are going to force me to drop artists and lay off staff.”

In the correspondence, Brummel noted that Spotify also owes several months of back-payments, with an uncertain payout schedule.  “Sorry to curse but in a few months — I am fucked,” Brummel continued.

The standoff is focused on mechanical royalties, which Victory claims aren’t being paid properly.  The label compared estimates from royalty-tracking partner Audiam with those provided by Spotify, and launched the dispute after discovering significant discrepancies.

“I begged them to leave our catalog up.”

Spotify bit back, and proactively pulled Victory’s catalog while claiming they weren’t informed on who to pay.  That obviously slammed Victory’s Spotify earnings to zero, but also likely eliminated the play counts and playlist slots for Victory Records artists.  “I never instigated anything with them. I begged them to leave our catalog up,” Brummel told Digital Music News in a subsequent email exchange.

“The record business is not always an easy one but I have never dealt with or seen a company behave in this manner.”

Brummel also dialed back the layoff talk, calling it ‘rhetoric’ while pointing to a financial impact that is anything-but rhetorical.  “Spotify represents 32% of our digital income YTD,” Brummel shared.  “So, yes, we are being impacted by their actions. But, we will find a way to keep moving forward like we always do.”

More as this situation develops.  

Image: Lee Haywood, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

15 Responses

  1. Tom

    So Spotify payments are so bad that no artist can make a living off of them. Except these guys who are dependent on them.

    Reply
    • Shlomo the great

      I was thinking the same thing. 32% ytd digital revenue but they’re not getting paid proper mechanicals. Victory digital ytd earnings would be about 20 bucks.

      Reply
  2. Josh

    I suspect Audiam might have been the problem here. Too busy trying to get their cut instead of thinking about what was best for Victory

    Reply
  3. Anonymous

    I hope publishers think twice about working with Audiam after this incident. From reading all of the back story on this, they seem like the problem and Instead of helping their clients get paid, their presence in between the relationship with Spotify seems to be presenting a barrier here. Such a weird company.

    Reply
    • King ahlomo

      Yeah real weird. They get content owners paid properly and help find indescrepancies. So weird. Did you expect an indie label to uncover these under payments? Perhaps assign an intern to do it. Maybe you. Yes you. Can you do a desk audit for victory? Oh you can’t. Than shut up you music industry moron.

      Reply
  4. Sholomo

    So many Audiam. Eh hem Jeff Price haters. Jeff is one of the most intelligent artist rights activists in music and continues to build great companies. If Spotify isn’t laying victory properly than who else is gettin screwed? I’d imagine a lot of inside labels/artists are getting butt fucked. Furthermore the amount of time and due dillegence that went into uncovering under payments probably took a lot of time for audiam. They should not only be compensated but commended.

    Reply
    • Anonymous

      Jeff Price is an asshole who burns bridges and lobs grenades. He lobbed the “missing royalties” grenade without getting his facts straight and Victory picked it up, assumed Audiam was looking out for them (when Audiam was looking out for Audiam), and got their proverbial revenue arms blown off. Not the first time we’ve seen this from Price & co, and won’t be the last.

      Reply
      • Anonymous

        It’s so painfully obvious that Spotify, right or wrong, just doesn’t want to deal with Audiam. If you consider that possibility, the story starts to make complete sense (because it makes none now)

        Reply
      • Anonymous Too

        ^^^^^^This.

        No one wants to deal with Jeff Price. Not even the people at his inaugural company.

        He’s a smart guy but, he IS an asshole who burns bridges and lobs grenades.

        Reply
  5. Shlomo

    Oh and anyone who sticks up for Spotify and thinks victory or Audiam are wrong are the problem. Leave the music industry. Go find a horse and live in the mountains. Major company screws artists. Artists want their money. Pundits say artists are wrong. Fools

    Reply
    • smg77

      Then artists should talk to their labels. Spotify is paying out big money to labels so why aren’t they paying their artists?

      Reply
  6. GGali

    I wonder how much of the previous royalty payments to victory, actually made it to the artist, sounds like it was used to keep the lights on and pay employees salaries.

    I don’t believe Audiam is to blame here at all, If you threaten suit to any company carrying your product in any industry, there will be a take down. When Audiam found discrepancies in royalties, it was still up to Victory on how to proceed.

    Reply
  7. Anonymous

    I don’t understand how Spotify can make up over 70% of their digital revenue. Is Victory not licensed on any other services? Spotify is becoming significant, but not that significant. I have a hard time believing every other service combined plus download sales equals less than 30% unless they simply didn’t bother licensing to other services.

    Reply
    • Troglite

      I believe he stated Spotify is 70% of monthly revenue, but only 30% of total annual revenue. Cash flow kills businesses large and small.

      Reply

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