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Spotify Reckons It Overpaid Artists In 2018. Now They Want The Money Back

Written by Allison Gallagher on June 25, 2019

Recently, Spotify, along with Amazon, Google and Pandora, joined to appeal the recent Copyright Royalty Board decision to increase songwriter payouts by around 44%.

Despite their opposition, Spotify are now trying to use the new rules advantageously, informing publishers that the board’s system means royalties were actually overpaid back in 2018 and, unsurprisingly, the streaming monolith wants that money back.

So what are those rules? Well, basically the Copyright Royalty Board states that annual streaming royalty rates in the US from 2018 to 2022 should be calculated by the highest outcome of three different models. One of those models is based around a flat rate per subscribers, which is where Spotify reckon the overpayments stem from.

Spotify offers both a ‘family’ plan and a ‘student’ plan alongside its normal model, and the Copyright Royalty Board states “a Family Plan shall be treated as 1.5 subscribers per month… A Student Plan shall be treated as 0.50 subscribers per month.”

That’s where Spotify believes the math has gone wrong, and that they deserve to be paid back. They’ve announced that rather than immediately collect the overpayment, they’ve offered to “extend the recoupment period through the end of 2019 in order to minimize the impact of the adjustment on publishing companies.”

Predictably, not everyone is stoked about Spotify’s decision to go after the money. David Israelite, CEO of the National Music Publishers Association, has come out against Spotify’s claims to Music Business Worldwide, pointing out that it’s a bit iffy for Spotify to try and recoup this money while simultaneously appealing the board’s new rules.

“I find it so hypocritical for a digital service that is appealing the CRB decision to then take advantage of the parts of that decision that benefit it,” he said. “I guess we shouldn’t be surprised.”

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