Spotify is negotiating a fast-track settlement over unpaid publishing royalties that could reach $30 million. But that may only cover part of the liability.
Please note: The following is a breaking story with quickly shifting details. Please check back for ongoing updates and developments.
Spotify may wriggle its way out of a perilous publishing royalty lawsuit after all, but it could be costly. Yesterday, sources to Digital Music News pointed to a $5 million one-time penalty, payable to the National Music Publishers’ Association (NMPA), part of a structured agreement that would also involve the construction of a working copyright matching interface and claims system for songwriters and publishers.
That ‘quick-n-dirty’ agreement remains unsigned, but is being given urgent consideration according to DMN sources. Indeed, the negotiations were quickly confirmed to DMN by NMPA chief executive David Israelite on Monday via email, though specifics over penalty amounts weren’t discussed.
Israelite subsequently pointed to longer-term discussions between the NMPA, Spotify, and other streaming services, with mechanical licenses the focal point of the talks.
The $5 million figure was soon parroted by Billboard in a copycat piece, with one humongous zinger. It turns out that $5 million penalty may be on top of earlier negotiated penalties of between $16 million and $25 million, according to Billboard’s unnamed sources, bringing the grand total to nearly $30 million. “The National Music Publishers’ Association’s (NMPA’s) settlement with Spotify … will include the streaming service paying $5 million in damages on top of the $16-25 million that the service owes music publishers and songwriters,” Billboard’s Ed Christman wrote.
The details of the penalty figures are vague, and the NMPA hasn’t responded to our latest inquiry. Separate sources have noted that the $16-25 million figure would be an estimate of damages, while the $5 million a non-compliance penalty. But regardless of the specific amount ironed out, Spotify would receive a massive discount off the estimated $150-200 million in potential damages from an ongoing, class action lawsuit. Spotify is aggressively fighting those claims, though a recent settlement with Microsoft over the exact same licensing problem suggests a long, arduous fight — and potentially disastrous penalties — ahead.
And there’s another bitter pill for Spotify: even if an NMPA-structured settlement goes through, that wouldn’t eliminate a large number of unpaid, non-NMPA members. In fact, that group would not only be excluded from the agreement, but potentially edged out of all back payments entirely if unsuccessful in court. As part of the NMPA arrangement described by sources, all unclaimed mechanicals would be redistributed among NMPA members based on marketshare, even if the royalties actually belong to someone else.
Stay tuned for more information!
Image by Thomas Galvez, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).