The World’s Largest Music Publishers Just Declared War on Spotify — In No Uncertain Terms

NMPA vs. Spotify, Round I
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Nobody said becoming a Wall Street billionaire would be easy.  Now, the largest music publishers in the world are preparing for a major fight against Spotify.

Last week, Spotify’s attorneys decided that the reproductive ‘mechanical’ license doesn’t apply to streaming services.  But that’s definitely the wrong answer for major music publishers.

Surprise! Spotify Says They Don’t Owe Anything for ‘Mechanicals’

Accordingly, the largest music publishers are preparing for the fight of their life.  Just this morning, National Music Publishers’ Association (NMPA) CEO David Israelite emailed Digital Music News with a very straightforward declaration of next steps.  The NMPA represents all of the major music publishers, and Israelite is their trusted bulldog.

Here’s the unedited statement emailed to DMN early this morning:

“Per your reporting on the Spotify situation:

1. This is now a fight with all songwriters – not just a conflict with these particular plaintiffs.  NMPA will be engaging in the manner and the terms of our choosing, but the one certain thing is we will win this fight.

2. Spotify’s ridiculous argument that it does not owe royalties for mechanical reproductions spits in the face of every songwriter that has made Spotify’s business even possible.  This has been a settled legal issue for over 10 years.  In two previous legal settlements.  In the legal filings of Spotify in the Copyright Royalty Board.  In the business practices of Spotify and all interactive streamers.  And, in the public statements of Spotify’s own employees.  If Spotify does not withdraw this offensive and baseless claim, it will become public enemy number one to the entire songwriting community.

David Israelite
President & CEO
National Music Publishers’ Association”

End of email.

Among the NMPA mega-clients are Universal Publishing Music Group, Warner/Chappell, and Sony/ATV.  But by the looks of this statement, Israelite is ready to commandeer the entire class of publishers and songwriters.  That’s a pretty big group.

Meanwhile, no word on what this face-off means for earlier, signed mechanical licensing settlements.  But according to our sources, those settlements were decried as a bargain by mega-publishers.  Israelite has countered that everyone was happy with the settlement — but that was before he took the gloves off.

More as this develops.

34 Responses

  1. Anonymous

    I think we’re getting close to Spotify’s white Bronco chase.

    • Dean Hajas

      Oddly, the record companies – songwriters and publishers haven’t gone after the real money in data streaming. Put the terms “Broadcast and Transmission” back in Streaming … and the PRO’s will be able to collect the same as TV or Radio broadcast, that’s Performance Royalties… simple, clean and efficient. Come on people, let’s make some money.

      • Pleaee Shut Up

        You have no idea what you’re talking about.

        Even a monkey working on he very fringes of the music business knows that the PROs collect performance royalties on streams – both interactive and non-interactive. And pretty much always have.

      • Neptune

        Been begging for this to happen for YEARS. Get this done already, good grief.

  2. Nicky Knight at Breakfast

    Of course he’s got a very good point… without songs then Spotify would not exist..
    and if Spotify’s paying out sums to sound recording companies for use of the performance then likewise they should be paying sums to the writers/publishers whose works are being performed.

    Without the song there would be nothin’

    • bhambob

      Spotify, is crooked as a barrel of baits. Subcribers can’t reach them by email to cancel their account, or anything else.

  3. Calvin Hodge Lake

    Love Groove Music Publishing Company BMI USA supports negotiation, not greed. The digital music age in the 21st Century has disrupted the music monopolies.

    • Paul Resnikoff

      Thanks Calvin. Would you be okay if Spotify did not pay you a mechanical, but only performance on streams (not counting cached copies)?

    • Blobbo

      typical napster- era wet-napping non-producer who wants a free ride.

  4. Roland of Aragon

    This is like a bitchy Wal-Mart employee protesting that they’re not getting the paid enough.

    Don’t sign a contract if you’re not going honor it. This is for both parties. The artist signed the deal, the problem is the dumbass artist didn’t read the contract.

    Don’t sign up if you don’t agree, go somewhere else and stop bitching.

    • Responding to an Uninformed Person

      With all due respect, you have no idea what you are talking about. There are no contracts. This is a statutory compulsory license in Section 115 of the Copyright Act. And, this is not about “artists”. This is about songwriters who have no choice whether Spotify uses their songs or not. So, who is the dumbass?

      • Respondi g to YOU, Dumbass

        Actually, it is YOU who has no idea what you are talking about.

        There a

        A mechanical for a stream is NOTa statutory compulsory license in Section 115 of the Copyright Act, which only covers physical reproductions. This is about a “contract.” A voluntary settlement between the parties, that they would agree that the mechanical license would apply to on-demand streams, despite Sec. 115 not explicitly applying to any types of streams.

        So, we know who the dumbass is, now.

    • Jimmy

      This isn’t about a contract. They stream music and musicians get paid shit. I’ve been making a living off live music performance and song writing over 20 years. You obviously don’t work in the music business for your income.
      Blue Roots Denver on 104.7fm & TV 56
      Roots & Rhythm

    • Jimmy

      Also your webpage is broken.
      Unless I typed it in wrong.

  5. Roland of Aragon

    If it was in the contract, yes pay the mechanicals, if not stop complaining. Simple as that. Honor the agreement.

    • Anonymous

      Yeah, but what if the contract (or any other type of license) with the rights owners doesn’t even exist, they use the music anyway, and then don’t pay? That’s the problem.

  6. Just curious

    The issue is whether a mechanical reproduction right is required for a stream. Why should Spotify have to pay for mechanical royalties on a stream, when, it has been universally accepted that internet radio streaming services (e.g Pandora), are not required to pay mechanical royalties for their streams.

  7. George Johnson

    David Israelite is a former DOJ attorney and the DOJ has the consent decrees on all songwriters and publishers. David Israelite has never written a song in his life. He is also responsible for setting the mechanical rate at $.00 for streaming in the 2008 Phonorecords proceeding in front of the CRB. Why are we still listening to him when he set the rate at $.00 cents almost single handedly? Add to that Spotify is partly owned by the 3 major publishers who are in Paris, Moscow and Tokyo. Nothing is going to happen, this is all bullshit.

    • Someone Who Understands

      George Johnson:

      Whne will the folks int he creative community learn that throwing around hyperbole and mis-representing the situation only hurts us?

      No. The DOJ does NOT have consent decrees covering “all songwriters and publishers.” Not even close. Indeed, the Consent Decrees specifically do NOT and can not apply to any individual songwriters.

      There are two Consent Decrees. They only apply, specifically, to only ASCAP and BMI. Neither SESAC, nor GMR – nor any other performance rights organization, or ANY songwriter – is under ANY type of Consent Decree.

      Songwriters are free to license their songs – or not – as they see fit, for whatever rate they want. Period. Full stop. Nothing requires you to join either ASCAP or BMI. Not. One. Thing.

      Your observation that Israelite is not a songwriter is just an ad-hominem attack. This is about the law that applies to how musical works are licensed and must be paid for, not “how songs are written.”

      Israelite didn’t set the mechanical rate at $.00 for streaming in 2008. Indeed, in 2008, he managed to get the digital services to agree to the unprecedented principle that a mechanical should be paid for an interactive stream (which is more typically a performance, under U.S. law – the whole issue being raised in the Spotify defense reported here). He DID agree – hardly “single-handidly” but rather, with the consent of every single one of his hundreds and hundreds of music publisher members – to a zero rate, but ONLY for promotional uses.

      I disagree that “nothing is going to happen” and “this is all bullshit.”

      Spotify has chosen to re-visit the very thorny issue of whether a stream (at least an interactive one…) implicates a mechanical royalty. If they follow this all the way through, the result will have great implications, for ALL digital music services.

      • Esquire

        Actually, paying both a stream and a mechanical was addressed by Israelite’s predecessor in an Oct 2001 agreement (RIAA, NMPA, HFA) later codified by the CRB.

        • Someone Who Understands

          Actually, the agreement to pay royalties for both the performance of a stream and also a mechanical on interactive streams was addressed by NMPA under Israelite – not his “predecessor,” in the 2006 CRB decision.

          You are apparently talking about the “rateless agreement” between RIAA, NMPA/HFA and DiMA in 2001. That agreement didn’t specifically cover the idea of both performance and mechanical being paid for interactive streams. It simply said that the parties would agree to, or litigate, the rate for things like tethered downloads and subscription services in the future.

          The essence of that agreement was part of the 2006 CRB settlement, but the CRB settlement significantly modified and expanded on that deal.

  8. Esquire

    Notice the one thing Israelite does not claim: That it is copyright law passed by Congress, signed by the President. It was a backroom deal. A conservative lawyer like Israelite knows the party in power howls when govt agencies write what he so loosely refers to as “the law.”

    Really, David? The authority to price piano rolls empowers the CRB to declare the same stream a performance and a mechanical? You know better. You are playing poker with songwriters’ money, and as good as you are that pair of twos is no pair of aces.

    Pay songwriters, of course. But Israelite is defending a system that pays twice for the same thing, and purely to preserve both sets of fee-grabbing anachronistic middlemen (performance societies and mechanical agencies).

    Consolidate the hands reaching into the royalty pool and more efficiently and directly pay songwriters. Defend the backroom deal at their peril.

    • Just curious

      Well said. This is not settled law. That backroom deal was no more than a detente, and doesn’t stand scrutiny. There is no logical or justifiable basis under which a stream of an internet radio service would trigger solely a performance right, BUT a stream of a work specifically selected by the user (which stream uses identical technology to the internet radio stream) should trigger a performance right AND a mechanical right.

      And let’s be clear, – what Spotify is doing isn’t necessarily waging war on songwriters, it is using weapons at its disposal to fight a lawsuit, – a lawsuit that would not have happened if the plaintiffs had joined the settlement brokered by Mr Israelite.

  9. Burton C Bell

    This is good news for artists, but this is only happening because the publishers realized that their coffers were not being filled. For any real change, they are going to have to get congress to change the constitutional amendment on royalties. ASCAP tried two years ago, and congress voted against it.

  10. Concerned Citizen

    Daniel Ek (aka Mr. uTorrent) is nothing more than a pirate crook. The cheap/free all-you-can-eat buffet style streaming model has killed the full-time creative professional indie musician. And with all of these widely available converter APPs today, nobody pays for music anymore any way and yet these greedy c*nts (Ek and his major label CEO cohorts) continue to rake in the cash via user view click ad revenues – again, not being shared with content creators/owners. We MUST have strict regulation, monitoring, enforcement and punishment in place before any real positive changes will take place. If Trump wants a “wall” so bad, one that will help millions of (not only) Americans, to bring back jobs and make America “great again”…. well, this is THE one to build. Ek should be locked up for crimes against humanity.

  11. jaynyc

    agreed. obama was the worst possible thing to ever happen to the independent music industry. artist or fan, he miserably failed us all and if things dont drastically change, and fast, we and future generations of creatives are doomed!!!!!!

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