Music streaming services have become a large part of how we discover new music, how we listen to music and allows us to curate our music into playlists. From Spotify, Apple Music, Deezer, Pandora, Ra.dio, mix radio and even SoundCloud, millions of users all over the world are trooping to these services to savour their music tastes. Even with these huge numbers, royalties remain an Achilles heel for most streaming services, with many accused of not paying enough royalties to musicians and songwriters. In August, a British union of music right holders including songwriters, composers and music publishers sued Sound Cloud over failure to enter into a licensing deal meaning it does not pay the songwriters their royalties. Pop sensation Taylor Swift withdrew her music from Spotify citing low royalties payments.
Earlier this week, fans of musicians signed to an independent label in the United States were left in the dark owing to a disagreement between Spotify and the label stemming from loyalty payments. The label is said to have hired a technology company that tracks unpaid royalties online upon receiving royalty reports from Spotify. The tech company Audiam found that Spotify paid royalties for the recordings but failed to pay for the songwriting royalties that amounted to 30% underpayment. Spotify which has previously stated that it spends 70% of its revenues in payouts to music right holders such as record labels, publishers, artists and distributors, pays artists for their music based on per stream metrics with artists earning between $0.006 and $0.0084 per stream. This will be an interesting matter to watch, as Spotify is currently the leading music streaming service in the world. The matter might generate legal issues for the company leading to hundreds of millions of dollars in royalty settlements.