Why doesn’t anyone know anything about how much Spotify actually pays? The answer is that Spotify’s most important contracts with the major labels are completely closed, and sealed by non-disclosure agreements (or NDAs). Which also means that if Spotify reveals anything about those contracts, the deals themselves can be nullified.
Which also means that it’s nearly impossible for major label bands like Radiohead to know what they should be getting paid, or IF they should be getting paid.
Which means bands are participating in unfair deals that they can’t even read. “We need the Justice Department or other government [agencies] to get involved and force transparency of those contracts,” Radiohead manager Brian Message told a group of managers yesterday, according to attendees sharing notes with Digital Music News. “This is already being looked at in Europe.”
Message’s comments were actually part of a broader set of meetings held Monday in New York to discuss streaming royalties, coordinated in part by Spotify. The meeting in which Message spoke was held at The Standard, right next door to a Spotify event at the Soho House (more details on that here).
And if you think NDA-protected deals are stinky, the artist contracts themselves are downright putrid. Basically, major-signed artists are part of Spotify and competing streaming services whether they like it or not, based on contracts that were often signed before streaming took off. Which is all the more convenient for major labels, as specific clauses in those contracts often specify that large portions of streaming income will not be remunerated back to artists (and if you don’t believe that, read this).
Add to that the secrecy created by NDAs, and you have a recipe for complete non-transparency. ‘There are NDAs that are driven by the labels that are designed to mask royalties,” a separate source stated.