NY Attorney General Urged to Investigate Suspected Spotify Royalty Scam

The letter to New York Attorney General Eric T. Schneiderman, sent by former Cracker frontman and artist activist David Lowery, follows a high-profile fallout between Spotify and Victory Records.  That dispute, focused on mechanical royalty problems, led to Spotify proactively pulling all of Victory’s catalog; Lowery alleges that money is being squirreled away without any proper accountability or oversight.

The full letter follows.

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5 Responses

    • Me

      I’m sure they could investigate every level/aspect of the music industry and find royalties not being paid correctly everywhere.

  1. Jeff Robinson

    David, your music is great.

    What you speak of is just the tip of the iceberg. With so many inequities within the music industry, where does one begin? Spitzer investigated Payola and where did that lead? While the major labels paid millions in the state of New York for their infractions, it meant NOTHING for anyone else across the country. Imagine if those fines would have been state-by-state? It would have put the major labels out-of-business.

    While the DOJ is currently seeking Public Comment on the existing consent decree, the entire system should be dismantled. The new legislation ought to read something to the effect of, “No distributor shall be able to distribute to ANY streaming entity any music which does have the following documented: 1. LLC, Corporation paperwork by label entity providing music to the distributor 2. All songwriters involved with project to be distributed properly affiliated with BMI and ASCAP 3. All publisher information documented in distribution paperwork/sign-up information 4. All performers and labels properly registered/Affiliated with Soundexchange.”

    Without such documentation, this mess will continue. Digital distributors enable the problem. With the proper documentation in place, we could then hold the streaming services to this standard.

    Further, the pyramid scheme of Venture Capital money flooding the non-profitable silicon valley streaming services needs to cease immediately. Also, the collections and payment standards at BMI and ASCAP should be investigated. Shaking-down venues and small town college radio for fees that only go to pay the Top 300 artists/writers getting played in the Top 100 markets helps only the 1% of the major label record industry. For a venue to have to pay a fee to BMI or ASCAP for an open mic with absolutely no possible way to have songs tracked by the PRO is ridiculous.

    Let’s think bigger than just unpaid mechanical royalties. Let’s make the whole system better.

    • Anonymous

      I totally agree with everything you say except for your last point about ASCAP and BMI. I’ve heard it said many times, but I just want to make sure you understand what you’re asking. The PROs license thousands of grocery stores, coffee shops, small venues, etc and many of those annual license fees that are collected are in the hundreds of dollars. There is no cost-effective way for them to identify what songs are being used in those establishments in order to make per song payments. Simply trying to identify the songs used would eat up all the money that is collected and then some. The rationale has always been that if a song is being played on radio or TV then it most likely is also being played in stores, etc. Obviously, this isn’t always true, but it does make a certain amount of sense.

      Now I do think that taking a look at the sample surveys that the PROs do for commercial radio is worthwhile. ASCAP launched a service (I think it was called Mediaguide) years ago that purported to track every single spin of every single song on commercial radio in real-time, and from the brief demo of it I saw it actually functioned as advertised. Even with that information they still continued to pay out based on sample surveys which without a doubt have huge holes in them. The samples definitely favor the top tier songwriters, but I think their reluctance to change has more to do with losing big writers to BMI if those checks shrink in any significant way and the same goes for BMI. Commercial radio is real money though whereas the general licensing fees collected from small venues is comparatively peanuts.