Ahead of their long-rumored IPO, Spotify has yet to fix its main problem: unmatched song royalties.
When a radio station plays a song in Sweden, Swedish copyright organization STIM determines who to pay. The organization does the same thing when listeners stream songs from Swedish artists and songwriters. Yet, for the second time in less than a year, Spotify hasn’t paid out STIM. Swedish artists and songwriters will now have to wait to receive payment for their songs streamed on the service.
A STIM spokesperson sent out a message to its 86,000 members. The message appeared on Swedish site BreakIt. It read,
“Since Spotify has not paid our issued invoices for Q4 2016, Spotify’s refund will not be included in STIM’s payment on June 15. This is because Spotify has different views about the terms of our agreement.”
Spotify’s lack of payment means Swedish artists and songwriters will miss the next big payday. The organization only pays out its members four times a year.
The Swedish streamer first missed their Q1 2016 payments to STIM back in September of 2016. At that time, negotiations between the streaming platform and STIM had not yet finalized.
The dispute specifically relates to ‘unmatched tracks.’ This happens when a streaming platform doesn’t have sufficient metadata to identify a song’s rightsholder.
The Swedish streamer claims that it offered to pay out all matched works. STIM, however, demanded that Spotify pay its entire invoice, matched or unmatched. Defending itself over the dispute, the Swedish platform slammed STIM. A company spokesperson told Swedish news site BreakIt,
“We offered STIM to pay out the full amount that could be matched with rights holders, but STIM chose to cancel the payment. The outstanding amount relates to non-matched works.”
The copyright organization claims that it hasn’t changed its invoice system. In fact, it billed Spotify in the same exact way as before. A company spokesperson told BreakIt that by refusing to pay, the Swedish streamer wants to change their current agreement with STIM.
“But now Spotify has a new interpretation of the terms of our current agreement. STIM believes that agreed principles and industry standards will apply.”
The problem of unmatched tracks remains a headache for Spotify. As it moves forward with its IPO plans, the streamer recently resolved a $200 million class-action lawsuit. Artist activist David Lowery first sparked the class action lawsuit. Ultimately, the streaming platform agreed to pay artists $43.4 million over a massive pile of unpaid mechanical licenses.
Spotify had previously reached a $30 million settlement with the National Music Publishers’ Association over unmatched and unpaid mechanical song royalties.
To avoid problems with unmatched tracks in the future, Spotify acquired blockchain data solution firm Mediachain Labs. With the acquisition, Spotify hopes to better attribute songs on their platform. As it moves forward with its IPO, the streamer hopes to avoid costly litigation in the future.
Speaking on their dispute with the copyright organization, a company spokesperson said,
“Spotify and STIM are actively working together to find a solution to provide all right-holders with their earned royalties.”
The copyright organization said that it has “high hopes that this will be resolved soon so that our members can be compensated as soon as possible.”
Image by Magnus Hoij (CC by 2.0)