With music streaming services facing more and more scrutiny regarding outstanding royalties and copyright laws, big streaming platforms are starting to face the financial consequences. According to a settlement reached with the National Music Publishing Association (NMPA), Spotify will be paying nearly $30 million in unpaid royalties via a payment pool established. Starting this April, members of NMPA will have a 3-month window to opt-in for the pool’s disbursement. Publishers will receive their payout after claiming and proving ownership of the unpaid songs, based on a share from actual plays of those songs. In addition to unpaid royalties, publishers will receive a portion of a $5 million penalty pool according to their estimated market share.
But, this isn’t just an effort to retrieve outstanding dues. Spotify and participating publishers will be developing standards and improvements for the streaming service to match music usage in the future. Publishers involved in this settlement will also be releasing Spotify from any claims regarding this collection of works.
“As we have said many times, we have always been committed to paying songwriters and publishers every penny,” Spotify global head of communications and public policy Jonathan Prince said in a statement. “We appreciate the hard work of everyone at the NMPA to secure this agreement and we look forward to further collaboration with them as we build a comprehensive publishing administration system.”
The settlement is a crucial move for Spotify, as many songwriters and publishers have taken issue with the streaming service using their works. Some have even griped about the $5 million penalty pool being too small, considering the maximum $150,000 fine per song for copyright infringement by law.