Swedish Artists Are Now Threatening Legal Action Over Streaming Royalties…

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“We’re saying that labels aren’t even allowed to give out this digital content to begin with.  So we want our music deleted, from every streaming platform.  That way, we can start from scratch and start re-negotiating and see where it lands.”

Per Herrey, attorney for the Swedish Musicians’ Union. 

Even Thom Yorke can’t pull his old Radiohead classics from Spotify, because the label has those rights.  But what if that isn’t quite true?  That’s the question now being tested by Per Herrey and the Swedish Musicians’ Union, Svenska Musikerförbundet.  The threatened lawsuits, first reported by Sveriges Radio in Stockholm, allege that labels are not only screwing artists, but extending digital streaming rights that they simply don’t have.

Of course, Spotify asserts that they can’t be screwing artists because they ‘pay the labels’.  Which is why labels are the target: Herrey points to possible legal action against Universal Music Group and Warner Music Group, both majors that have received massive advances and equity shares from Spotify while passing little on to artists.

Herrey estimates that artists capture between 6 to 10 percent of revenues received from companies like Spotify.  “You can’t live on that,” Herrey relayed.

“If you compare that to radio, where the split is 50/50 between labels, artists and musicians, there’s no comparison.”

The origin of the outrage is telling: Sweden is widely regarded as a model country for streaming and access, thanks to massive adoption and recovering recording revenues.  The threatened suits suggest that not everyone is celebrating or, more importantly, enjoying the early spoils.

Regardless of the locale, the issue comes ahead of very difficult juncture for Spotify.  Mega-artists like Thom Yorke continue to raise uncomfortable questions about paltry payouts, but more perilous questions are dangling on the financial side.  Recent financial figures show an unsustainable level of cash burn at Spotify, and potentially serious problems attracting more capital as a result.  And after burning through hundreds of millions of dollars, Spotify is getting dangerously close to depleting its funding tranche.

It’s unclear which artists would drive the suit, though labels could be over-extending their rights on older contracts.  That’s currently a massive problem for major labels in the US, thanks to a momentous decision involving original Eminem publisher F.B.T. Productions.

More as it develops.  Written while listening to Arcade Fire’s purposely-leaked album, Reflektor.

10 Responses

  1. Dave

    Spotify should force the music labels to share more royalties.

    Spotify has the power. It should use it.

    • GGG

      Spotify could definitely pay out more in royalties but yea, a lot of the issue for signed artists is beyond what Spotify pays out. Not sure how they could force the labels to do anything, but it’d be nice. One of those articles about Thom Yorke’s crusade mentioned that Daft Punk got $13K for over 100M Get Lucky streams, which, if that is correct, says their label/people are fucking them over FAR more than Spotify, who should have paid out close to a million bucks.

  2. David

    There is a problem with the lack of reliable information. For example, Thom Yorke’s figures for Daft Punk were little more than guesswork. Why did he give speculative figures for another artist, when he could have given the figures he actually knows for his own music, either in Radiohead or in his solo capacity?

    One of the very few reliable data points is Zoe Keating’s report that she earned 0.4 US cents per play on Spotify. But Zoe is an independent artist who gets the entire royalty minus a small commision (5% I think) to an aggregator. An artist/band signed to a label under a conventional recording contract might get much less than that – maybe less than a tenth of a cent if they only get a 10% royalty. But even a twentieth of a cent would be more than the alleged figure for Daft Punk (though if I recall correctly that was actually a figure for each of DP’s two members).

    Another reliable figure is David Lowery’s report of receiving $12.05 for 116,280 plays, which is only just over one hundredth of a cent per play. But Lowery explicitly said that that was a royalty as a songwriter, not performer (and again, speaking from memory, it was as one of two songwriters). For some reason songwriters’ share of streaming revenue does seem to be much lower than for record sales.

    A more dubious figure is Jon Hopkins’s claim (in an angry tweet) that he had just got a payment of £8 for 90,000 streams, equating to about a hundredth of a US cent. Hopkins is signed to a small independent record label in the UK, but I find it difficult to believe he would be on such a low royalty. (If the label gets 0.5 of a cent per play, then even 10% of that would give him 5 times as much.) The similarity of the figure to that of Lowery makes me suspect that in fact it was a songwriter’s royalty.

    So unless and until we get more reliable data, it seems premature to assume that record labels are screwing over their artists. What does seem clear is that the share of revenue that goes to artists should be higher in the case of streaming than in the case of physical records (CDs or vinyl). In the case of physical records the cost of manufacturing and retailers’ markup may be 50% of the retail sale price, whereas for streaming the costs to the label are much lower. If they still take the same share of revenue, they are in effect getting an unearned bonus.

    • TuneHunter

      “In the case of physical records the cost of manufacturing and retailers’ markup may be 50% of the retail sale price, whereas for streaming the costs to the label are much lower.”

      You are one of the few who noticed this little digital difference! $1.29 @ ITunes is like $39.99 for CD!

      It is time to monetize music at the discovery moment – 39 cents outright purchase or addition to the play list. THERE IS NO REASON FOR TOTAL PLEASURE AT MUSICIANS EXPENSE. Spotify with Shazam and simillar tune suggest at extra toll is perfect.
      Same Disocvery Moment Monetization applyed to Pandora, all iRadios and normal radios will double the industry in 36 month and open the door to 100 billion dollar business by 2020.
      Take a minute and think – it is so simple!
      Discovery engines have over billion users, they are all starving and in 90% cases provide free service to pirates or to much of undeserved pleasure to Spotify crowd. They never been noticed by labels and they are the main reason behind the demolition of the industry.

    • GGG

      I agree with pretty much all of this. Though, from what we know the numbers fluctuate so it’s sort of a case by case basis. At least in terms of DIY, indie, major.

  3. TuneHunter

    “In the case of physical records the cost of manufacturing and retailers’ markup may be 50% of the retail sale price, whereas for streaming the costs to the label are much lower”

    You are one of the few who noticed this fact. $1.29 at iTunes is like $39.99 for CD.

    It is overdue for discovery moment monetization at just 39 cents – purchase or addition to Spotify play list.
    Discovery services have over billion users and all lose cash. Over 90% of their activity provides service to pirating public and undeserved pleasure to streamers. Those services in current set-up are the biggest cancer of the industry. Discovery Moment Monetization would interlock them with Streaming, iRadios and normal radio and would double the business in 36 month and open the door to 100 billion dollar industry by 2020. Just think – it is so simple!