When calculating the new, higher rates determined by the U.S Copyright Royalty Board — which Spotify, Amazon, Google and SiriusXM/Pandora have appealed — Spotify has determined that it overpaid publishers in 2018 and would like a refund.
“According to the new CRB regulations, we overpaid most publishers in 2018,” a Spotify spokeperson said. “While the appeal of the CRB decision is pending, the rates set by the CRB are current law, and we will abide by them — not only for 2018, but also for future years in which the amount paid to publishers is set to increase significantly. Rather than collect the 2018 overpayment immediately, we have offered to extend the recoupment period through the end of 2019 in order to minimize the impact of the adjustment on publishing companies.”
The rep declined Variety‘s request to disclose how much had been overpaid; reps for the three major music publishing companies did not immediately respond to Variety’s requests for comment.
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While Spotify may be within its rights to request the refund, the timing of it is the latest in a series of extraordinarily clumsy PR moves by the company. Since the beginning of last year, it has bungled a policy against hateful content and artists engaging in hateful conduct — which was a thinly veiled excuse to ban R. Kelly’s music from its playlists — and alienated the publishing and songwriting communities it has spent the past two years courting by appealing the CRB rate hike, which would see streaming payments rise by 44% or more over the next four years.
Some industry insiders wonder whether the damage these moves are causing to the still-nascent company’s reputation outweighs whatever money they are hoping to earn by appealing the CRB rates or requesting these refunds.
“Spotify is once again showing its true colors,” said a music-publishing industry source. “It’s just a heartless tech company that doesn’t really care about artists.”
David Israelite, the CEO of the National Music Publishers Association, told Music Business Worldwide: “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. I guess we shouldn’t be surprised.”