STIM: “Spotify Hasn’t Paid Our Bills”

STIM: "Spotify Hasn't Paid Our Bills"
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Spotify CEO Daniel Ek

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)

5 Responses

  1. Anonymous

    I’ll admit I’m not sure how things work in Sweden. That said, I would assume that this is a census-reporting agreement, and STIM has the burden of matching sound recordings to compositions under this arrangement. I would consider it likely that STIM is able to match things that Spotify isn’t. Therefore, it would make sense for Spotify to pay STIM in full, and STIM should be the keeper of the so-called “black box”, and pay out those royalties to songwriters as they are able to match the sound recordings. What Spotify’s doing just doesn’t make sense. Whatever short-term savings they have in royalty payments is not worth the liability that comes with taking the track-matching burden upon themselves (which they have already proven to not be that great at). Unless, of course, they believe this won’t bite them in the ass until after the IPO. Or perhaps they believe the Lowery and NMPA settlements will reduce such liability. I dunno. I can’t think of anything good that comes out of this.

    • Paul Resnikoff

      Agreed on many points, but, I can definitely see Spotify’s perspective. After all, STIM is saying: pay us this giant sum of money, and we’ll try to match as much as we can. The amount we can’t, we’ll just keep in an account and draw massive interest on it. We might even invest it.

      Why should that capital get to sit in STIM’s bank account? It’s the same issue we’ve seen with Pandora and SoundExchange in the US. Pandora would witness hundreds of millions sit unclaimed on SoundExchange’s accounts, probably never to be claimed. But Pandora could really use that money, and ultimately started figuring out ways to avoid that scenario.

  2. GMRIFL

    It’s not as that simple guys. In EU many societies (like PRS) has multi-territory deals and collect money from whole Europe. What’s more – biggest publishers has their own systems of collecting royalties from DSP (for example Sony/ATV/EMI Solar). Right now there’s a lot of problems with DSP-societies digital ‘counterclaims’ – situations when two (or more) parties claim that they own the same share of the same song. That’s why Spotify needs to pay for matched songs only (if it’s not STIM song, maybe work is controlled by GEMA? Or OSA? Or ARTISJUS? Or writer is NS(is not a member of any society)?

    In fact, I don’t understand why Spotify decide which song is controlled by STIM. Other PROs get all service’s database and try to find their repertoire.

    • Anonymous

      Thanks for this. If STIM doesn’t collect performance royalties for all songs in the territory, that certainly helps to explain Spotify’s actions. Some of that unmatched money would probably not be STIM’s to collect, and Spotify shouldn’t have to double pay multiple societies for songs subject to counterclaims.

    • bc

      this is probably why the idea of a “global rights database” has always appeared every so often then never happened. There is no way we will ever reach a definitive database showing who owns rights to what. Will NEVER happen. Everyone has their nose in the trough and so many publishers, writers etc are making money off songs they don’t even own rights to. Plus you think all the labels and publishers are going to stick all their “claiming to own” data in one place? It will be a data orgy for lawyer creeps the world over.

      Does that mean the back end of the industry continues to move along at a snails pace while the consumer and tech side tries to gallop forward? Yes but you know what they say, “this is why we can’t have nice things.”