Are You Missing Out on Royalties Payments?

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Recent class action lawsuits alleging copyright infringement have highlighted the grey area that exists in streaming platforms payment of royalties. Rights holders, publishers and artists might be missing out on revenue.

Earlier this month, Spotify was hit with another massive lawsuit over alleged copyright infringement. The class action lawsuit claiming $200 million in damages is the second of its kind, with a similar suit filed two weeks prior seeking $150 million. Both suits are alleging that the music streaming service is wilfully and systematically carrying out copyright infringement.

While the
intentions behind the alleged infringement are unlikely sinister in nature, the effect is essentially the same; rights holders and those entitled to royalties from streams are being left uncompensated due to sloppy accounting.

Spotify has admitted some wrong doing in regards to the distribution of streaming royalties, and claims to be in the process of building a comprehensive system to fill in the missing information needed to properly compensate those who are entitled. However, what the two lawsuits have drawn attention to is the fact that Spotify doesn’t necessarily have the legal right to be streaming a good chunk of its catalogue.

The bigger issue here is the mess that the music industry has found itself in as they scramble to transition into the world of streaming. Labels are offering up their catalogues for lump-sum payments and equity stakes in the new streaming providers. The major labels are ensuring their future by financially embedding themselves into the streaming world, with the finer details of royalties distribution falling by the wayside.

As streaming service options expand, the problem will likely get worse before a more efficient way forward is found. Last week, Universal Music Group reportedly struck a licensing deal with SoundCloud, the berlin-based streaming service that also serves as a platform for many independent artists to upload their unlicensed work. The deal comes in light of SoundCloud expansion plans for 2016 which includes ad based revenue and a paid subscription option.

It is clear that companies and labels alike are finding ways to monetise all the music streaming online, but this doesn’t necessarily protect the position of rights holders. And with SoundCloud’s expansion plans, independent artists may even become entitled to monetary compensation. To date, Spotify claims to have paid out over $3 billion in royalties; how much of this did you see?


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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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