Is Spotify’s 1,000-Stream Payment Threshold Legal? Songwriter Calls on CRB To Block ‘Unreasonable, Discriminatory, and Anticompetitive’ Model

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Washington, D.C.’s James Madison Memorial Building, which houses the U.S. Copyright Office. Photo Credit: UpstateNYer

Amid continued debate about (and criticism of) Spotify’s reported plan to cease paying royalties for the vast majority of on-platform works, one songwriter is formally questioning whether the involved model is legal under stateside copyright law.

Songwriter and copyright-reform activist George Johnson just recently described in detail perceived issues with the “anticompetitive as well as discriminatory” framework. While Spotify hasn’t officially announced its revamped royalties system, reports have suggested that the pivot will pause payments to songs with fewer than 1,000 streams during the prior 12 months.

And as reported by Digital Music News, the majority of Spotify’s over 100 million tracks (as of 2022’s end) haven’t secured 1,000 all-time streams, with a smaller number yet poised to generate 1,000 streams during any 12-month period in the future.

Some have expressed support for the model, claiming it will benefit proper artists financially, whereas others have rather publicly laid out their concerns with the idea of ending payments for many millions of tracks.

Now, as initially highlighted, the conversation’s shifted to whether the compensation approach is illegal particularly when it comes to underlying compositions.

According to Johnson, who explained his position in a letter to the three-judge Copyright Royalty Board (CRB), the “unlawful” Spotify stream threshold “seems completely contrary” to the Copyright Act (specifically including the Section 115 compulsory license), CRB determinations for Phonorecords III and IV, and more.

“This fraudulent scheme is apparently a way for Spotify to not pay almost two-thirds of all American music copyright authors for their performances, reproductions, and distribution of their individual works already licensed to Spotify,” Johnson wrote, proceeding to cite court cases in support of his position and Spotify’s alleged history of committing “brazen and willful mass copyright infringement.”

In closing, Johnson asked the CRB judges to “not allow Spotify to commit this brazen mass copyright infringement” upon songwriters, describing the Spotify stream threshold as “unreasonable, discriminatory, and anticompetitive” for good measure.

Moving forward, it’ll be worth keeping an eye out for a response from Spotify to comments from Johnson and others, not to mention an actual announcement of the royalties revamp.

More immediately, Word Collections founder Jeff Price spoke to Digital Music News about potential legal questions surrounding Spotify’s reported plan to tie royalties to a minimum stream count. Although free-market negotiations guide the flexible rates and terms associated with the use of recordings, compositions, Price reiterated, are covered by the compulsory license.

“The license for the underlying composition is the compulsory license,” Price said to DMN. “And those terms are set by the US government and codified with regulations and requirements that cannot be changed unless Spotify does a direct license for the underlying composition.

“The sound recording could get nothing from streams one to 999, but the underlying composition would still need to be paid mechanicals,” he continued.