Cease and Desist: Spotify Faces Heat from National Music Publishers Association

In a significant move that could reshape the digital music landscape, the National Music Publishers Association (NMPA) has issued a cease and desist letter to Spotify, alleging that the streaming giant is hosting lyrics, music videos, and podcast content containing copyrighted musical works without proper licenses. The NMPA represents music publishers across the United States and is demanding the removal of these allegedly unlicensed works from Spotify’s platform, warning that failure to comply could result in serious copyright liability.

The Financial Impact of Spotify’s Bundling Strategy

This legal action follows hot on the heels of a report by Billboard, estimating that Spotify will pay around $150 million less in U.S. mechanical royalties to music publishers and songwriters in the coming year. This decrease is attributed to Spotify's integration of audiobooks into its premium, family, and duo plans. By doing so, Spotify claims that these plans now qualify as bundles, which allow them to pay a discounted royalty rate compared to standalone music subscriptions.

The Core of the Dispute: Unlicensed Content

The NMPA’s letter, penned by its executive vice president and general counsel Danielle Aguirre, accuses Spotify of direct copyright infringement. The letter states, "Spotify appears to be engaged in direct infringement by hosting unlicensed musical works in its lyrics, videos, and podcasts and by distributing unauthorized reproductions, synchronizations, displays, and derivative uses of these musical works to its users." This direct infringement allegedly results in Spotify profiting from the unauthorized use of these works.

The Broader Context: A History of Tension

This isn't the first time Spotify and the NMPA have clashed. The two entities have had a contentious relationship, particularly over how mechanical royalty rates for streaming are set. However, a settlement was reached in 2022 that set the rates for 2023-2027, which was lauded as the highest streaming rates in the history of digital streaming. Despite this progress, the NMPA now accuses Spotify of exploiting a loophole in this agreement through its bundling practices.

Potential Legal Ramifications

The NMPA’s letter also references a Wall Street Journal article claiming that Spotify is developing tools that would allow subscribers to "speed up, mash up, and otherwise edit songs from their favorite artists." The NMPA warns that any such features released without the proper licenses could constitute additional direct infringement.

In its response, Spotify dismissed the letter as a "press stunt" filled with "false and misleading claims," asserting that it is committed to the integrity of its platform and has a clear process for rightsholders to address any concerns about unlicensed content.

What’s Next?

If the NMPA’s concerns lead to a lawsuit, it could have significant implications for how streaming services negotiate and manage licenses for various types of content. It also underscores the complex and often contentious nature of licensing agreements in the digital age.

As this situation develops, it will be crucial to monitor how both Spotify and the NMPA navigate these legal and financial waters. For now, it’s clear that the debate over fair compensation and proper licensing in the music industry is far from over.

At Ed White Law, we are dedicated to representing musicians and artists, ensuring their intellectual property rights are protected and respected.