Streaming music service, Spotify, has been hit with several lawsuits over payments to artists.
Music publishers will get royalties for songs streamed on Spotify under an agreement reached with the National Music Publisher’s Association (NMPA).
The deal calls for Spotify to pay about $21 million to publishers and songwriters — $16 million for royalty payments and $5 million for a bonus fund for those who opt in to the arrangement. The deal covers all content on Spotify from its inception in the United States until June 30, 2017.
Artists can opt in during a 90-day period beginning in early April. Under the agreement, they will receive a portion of the bonus fund, be able to use an online portal for claiming royalties and get some royalties for songs that remain unclaimed, based on how many times Spotify played them.
The streaming service also agreed to improve the accuracy and efficiency of its royalty payment system and will allow publishers to enter into agreements with Spotify, a move likely to avoid future lawsuits.
“We have always been committed to paying songwriters and publishers every penny,” Spotify spokesman Jonathan Prince said in a statement.
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The agreement follows the filing of several class-action lawsuits against Spotify over unpaid royalties. Those lawsuits seek hundreds of millions of dollars in damages, and the latest deal could impact their outcome. The NMPA settlement will likely require participants to waive their right to recover any money from legal proceedings against Spotify.
Late last year, musician David Lowery filed a $150 million class action lawsuit against Spotify claiming the company knowingly distributes copyrighted content. Lowery, who has become one of the most vocal critics of the music industry, says the streaming service has illegally hosted songs by his band Cracker. As part of the class action suit, he will represent a group of more than 100 members similarly angered by the service.
While the NMPA settlement could ward off future litigation, some industry experts question whether it will benefit artists because the deal was struck without court oversight. Lawyers involved with Lowery’s lawsuit advise anyone considering joining the settlement to consult their own attorney first.
By agreeing to the deal, parties likely will be prohibited from suing Spotify in the future.
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