Judge Denies Spotify Motion That Would Have Upended Songwriter, Music Publisher Payments
In an important ruling that would have changed payments to songwriters and music publishers, a judge has denied a motion from Spotify that claimed that it didn't need to license tracks from publishers because they are more like online radio streams than downloads.
Although the denial of the “motion for a more definite statement” means the case can proceed as is, reports Billboard, it does not prevent the company’s attorneys from continuing to use that argument.
If Spotify's new legal argument had prevailed, streams on Spotify would be treated and paid for like net radio.That means that Spotify never needed to get mechanical licenses for any songs in the first place. Instead, music streamers would only need blanket licensing through a performing rights organization like SoundExchange, ASCAP, BMI or SESAC.
What aspect of Spotify’s service are the rightsholders claiming requires mechanical licensing? If it’s the “download” feature that allows listening offline, I can see a colorable argument that the subscriber has obtained a “copy” of the song, necessitating mechanical licensing, although Spotify certainly has contra arguments. The crucial analysis should focus on what the user gets. Does he get a “copy” that he exercises control over (e.g.; Can he transfer it from one storage medium to another – e.g., from his phone to his iPod? Can he resell his copy?) as he would if he went to the store and bought a CD? Or is what he gets closer to what he gets when he listens to a song on the radio (e.g., once the song is over, he’s left with nothing)?
Since Spotify’s streams are considered “Interactive Streams” – meaning you can choose what to play and when to play the songs, as opposed to traditional radio, where you have no choice over what is played – those streams are entitled to a mechanical royalty. The fact that Spotify is not paying these royalties, when the laws are blatantly clear regarding streaming that they have to, is a gross overstep on their behalf. They need to make sure they are paying what is due, just like the rest of the streaming services who are probably overstepping as well. Unfortunately, this industry is moving so fast that laws and infrastructure is having trouble keeping up, and until the basic foundations are laid, we will continue to have issues like this with every streaming service.