Spotify and the National Music Publishers Association (NMPA) brokered a deal on Thursday allowing independent and major publishers and songwriters to receive royalties from songs that were put up on the music streaming service but which ownership information were previously unknown. Billboard senior editor Jem Aswad called the agreement a "win" for all parties.
"It's a win for the songwriters and publishers on one hand because they are going to get paid, and it's a win for Spotify because it will end some of the lawsuits. It will end some of the disputes going on," Aswad commented, via Reuters.
Under the agreement, members of the NMPA will participate in the disbursement of an estimated $30 million-worth payout pool, which will compensate for the period between Spotify's launch until Jun. 30, 2017. An automatic renewal period will span another 2 years up to Jun. 30, 2019.
According to Billboard, song publishers will receive remuneration based on the actual plays of those songs. The monetary claims will be taken from the $25 million already funded by Spotify. In addition to this, publishers will receive further payment based on the publishers' estimated market share which will be calculated by the NMPA. The numbers will be taken from a $5 million penalty pool, also funded by Spotify.
Any leftover funds will be divided by participating publishers and songwriters, and the amount they will receive is based on their market share for a certain royalty period on Spotify.
Moreover, the parties have also agreed to come up with a set of "best practices" which will guarantee that Spotify puts in the effort to match all music on the streaming service as they move forward with the deal. They will also hold regular meetings to discuss how to better improve the matching process between the service and the song publishers.
"We have always been committed to paying songwriters and publishers every penny," said Jonathan Price, global head of communications and public policy at Spotify. "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 deal between Spotify and NMPA was negotiated three months after the music streaming company was hit with two class-action lawsuits over alleged copyright infringement. The first lawsuit, filed by musician David Lowery, sought $150 million in damages and the other, filed by singer Melissa Ferrick, demanded a whopping $200 million. Both lawsuits were filed in the U.S. District Court in Los Angeles, Wall Street Journal reported.
Since its launch in 2008, Spotify has reportedly paid out $3 billion in royalties to music publishers and artists. The company has reserved $16 million which will be allotted to songs that have remained unmatched due to missing ownership information.
