Spotify Bundling Fallout Continues; Federal Lawmakers Present ‘Serious Questions’ to the Copyright Office About ‘A Compulsory Licensing System That Robs’ Songwriters

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

Amid continued criticism over – and legal challenges against – Spotify’s aggressive embrace of bundling, federal lawmakers from both sides of the aisle have reached out to the Copyright Office with “serious questions” over the change.

Those lawmakers, Representatives Ted Lieu and Adam Schiff as well as Senator Marsha Blackburn, just recently released a public copy of the appropriate letter. Far from coming as a surprise, the message, one component of an increasingly involved campaign against Spotify’s bundles, was touted at the National Music Publishers’ Association’s 2024 annual meeting yesterday.

“As part of this legislative effort,” NMPA head David Israelite revealed after underscoring plans to enable direct publisher negotiations with DSPs, “I am pleased to announce that today, Congressman Ted Lieu of California, a senior member of the House Judiciary Committee, as well as Senator Marsha Blackburn and Congressman Adam Schiff, have sent an official letter to the Copyright Office regarding the Spotify matter.

“The letter warns of Spotify’s abuses of the statutory rate process and questions whether there are sufficient protections in place to ensure companies that use the compulsory license cannot abuse the system,” proceeded Israelite.

In keeping with that description and the NMPA’s direct-negotiation ambitions, the letter itself, addressed to Register of Copyrights Shira Perlmutter and spanning a little over 500 words, begins by taking aim at the compulsory license.

“American songwriters create the music we love but have long labored under a compulsory licensing system that robs them of control over their work and the ability to receive fair compensation,” the lawmakers penned, touting the Music Modernization Act and then reiterating the much-discussed specifics of Spotify’s bundling reclassifications.

“Digital service providers should not be permitted to manipulate statutory rates to slash royalties,” the representatives and the senator proceeded, “deeply undercutting copyright protections for songwriters and publishers. A fair system should prevent any big tech company from setting their own price for someone else’s intellectual property, whether the owner wants to sell or not.”

And from there, the lawmakers acknowledged an intention to “explore a response to these recent developments.” For the time being, though, two related (and decidedly straightforward) questions were posed to the Copyright Office to help the congressmembers “understand the available options.”

The first requests details about “protections in place to ensure” that the compulsory license cannot be abused “to the detriment of copyright owners.” And the second concerns the availability of “an efficient, low-cost process by which copyright owners may seek relief where improper or illegal actions are taken by licensees.”

While it’ll be interesting to see how the Copyright Office responds and how Congress approaches the multifaceted situation from there, it can safely be said that there’s growing fallout surrounding Spotify’s bundling. Although the MLC is suing over the change and alleged royalties underpayments, the NMPA has levied a complaint with the FTC, and a different legal action yet could well be on the way, Spotify doesn’t appear to plan on backing down.