Spotify putting artists on the SPOT?

This pandemic has seen a boom in the creative industry with thousands of artists releasing new tracks every day. Streaming channels have emerged as a source of revenue and growth for artists and record labels. But releasing music online also comes with the issues of tracking the streaming data, handling licenses, and fixing the royalty settlements. This article discusses the current structure of licensing of music in India with special emphasis on the role that Spotify has played over the years. The researcher’s resonation with the topic is provided in the conclusion and a few suggestions for the betterment of the current situation are also stated.

Current Licensing Framework

The Internet is covered under the provision of Statutory Licensing under Section 31 D of the Copyright Act, 2013 as an attempt to have a law governing the broadcasters and online streaming platforms. Previously, music owners were represented by societies such as, Phonographic Performances Limited (PPL) and Indian Performing Rights Society (IPRS) which collected royalties on their behalf.[i]

But now, under the current Statutory Licensing System, an organization can broadcast the work of an artist by issuing him/her a notice, specifying their intention and paying the appropriate royalty rate that the copyright board, currently, IPAB (Intellectual Property Appellate Board) deems fit.

On streaming/playing a song online, master recording and publishing royalties are produced which are collected by the distribution agency and paid to the artist and the performer as master recording royalties and to the songwriter as the publishing royalties.

These publishing royalties also comprise of performance and mechanical royalties that are generated on streaming of the song and are tracked and then collected by collection societies around the world.

Licensing of Music will depend on the type of stream chosen by the Artist and must be secured before posting/ releasing the music on the streaming platform. Music videos need synchronization licenses whereas audio-only streams require a mechanical license.

Unfortunately, there are still ambiguities with respect to licensing for streaming platforms which are in turn leading to cases of copyright infringement. Therefore, it is always advisable to check the terms of use of each service/ platform to ensure the licensing of music.

In focus: Spotify

Spotify has only seen an upward growth since its launch in the country in 2019 and is one of the major players in the league of online music streaming. The users are at the liberty of choosing from millions of artists and genres and are also updated about the new releases. There are also specially curated mood boards and playlists for different activities in our daily lives. But, is it convenient for the artist too?

There is no denying the fact that new releases and artists are noticed by the audience, but the issues of low royalty rates are slid under the carpet. Spotify states that it is free for artists to upload their music. However, an artist has to acquire a music distributor who will most likely charge a commission. On average, the music holder is paid 0.28 Indian Rupees[ii] per stream, which is usually split between the artists, writers, music producers, and their record labels. These royalties are paid after 2-3 months after the streams happen.[iii]

In 2014, Taylor Swift pointed out the major con of streaming music online and said that it undervalues art and should not be free. She also discontinued her music on Spotify due to the low royalty payments and the issue of the app directly cutting into paid album sales.

Similarly, another popular musician, Damon Krukowski says that getting financial data from Spotify poses difficulties and an artist cannot know the amount of money he/she is making.

The app also heavily advertises itself, to an extent where the listener is left with no choice but to subscribe and convert into a premium account to listen to music without any advertisements and breaks. Spotify’s insensitivity towards the artists by paying them paltry sums is a devastating but ongoing affair.

Conclusion

Sadly, it seems to us that the main focus of Spotify is to market and benefit the platform rather than the artist. The platform is enroute to becoming a media conglomerate especially keeping in mind the podcast acquisitions.

Approximately 70% of the total sales that a song makes goes to the distribution agencies, who then pay the artists after deducting their commission and this mechanism does not apply to the “not so popular” artists as there is no first-hand data about the revenue earned by their music. It is heart-breaking to watch deserving artists being left in the background and the slow death of the music culture.

It’s never too late to mend. If used thoughtfully, online music streaming can be very beneficial to artists, the recording industry, and consumers. As independent and upcoming artists continue to release their masterpieces on Spotify, we can only hope the platform does justice to their work by paying them the remuneration they deserve.

Suggestions

  • The balance in the creative market has to be restored and artists should be seen as professionals and given importance in society.
  • Streaming Platforms have to be transparent with respect to the tariff rates and the royalties paid to the artist. Detailed data must be kept for the purpose of accountability.
  • Artists must be given more power and importance in decision making and the interests of both users and rights holders have to be considered for efficient working of the digital music distribution system. They must be educated about their legal and professional rights.
  • Artists and the labels should stop completely relying on such streaming services and must establish websites on their own.
  • Efforts should be made to support small and local artists and value their art.

[i] TimesofIndia, Music streaming services welcome govt’s clarification on Statutory Licensing, Sept 8, 2016, found at http://timesofindia.indiatimes.com/articleshow/54074990.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[ii] Bromely, Jordan, “US Streaming Royalties Explained.” Manatt, August 17, 2018.

[iii] Leni, “How Music Distribution Works: Everything Artists Need To Know”, April 20, 2020, found on https://www.amuse.io/content/how-music-distribution-works-everything-artists-need-to-know?cn-reloaded=1&cn-reloaded=1

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