November 6, 2013 at 12:28 pm

Swedish Artists Prepare Lawsuit Against Labels over Spotify Payouts (Updated)

swedish musicians spotify boycott labels

Swedish Musicians Union lawyer Per Herrey

It’s become a familiar trope that some recording artists don’t think they get paid enough from subscription services like Spotify. Sometimes, their ire gets directed at the streaming services themselves, who pay a label-negotiated rate per stream, which Spotify co-founder and CEO Daniel Ek predicted would send $500 million to copyright holders this year from Spotify alone.

A new lawsuit being prepared by Scandinavian artists places the blame for low payouts to artists not on Spotify, but on their record labels, who the artists say are taking too large a share of Spotify’s payouts. Still, they plan to boycott Spotify if their demands to the labels are not met.

As reported by Sveriga Radio (in Swedish) and echoed by The Guardian (in English), members of the Swedish Musicians Union represented by their lawyer Per Herrey are going to withdraw their music from Spotify unless the labels revise the way money is passed on from streaming services to labels to artists. From The Guardian’s report,

Artists that signed their record deals in the 1980s or earlier tend to be on a royalty split that gives them 6% to 10% of revenue from record sales… if the service pays an average of 0.5p per stream, these artists make no more than 0.05p from it – or, put another way, they make £500 for 1m streams, while the label pockets £4,500. Add to that the shares the labels own in Spotify and the money they stand to make if it goes public – and the ‘access fees’ that digital services pay major labels in order to get access to their catalogues — it [is] no wonder that the labels are hailing streaming as the future.

Older artists are also complaining that their contracts don’t even cover digital distribution in the first place, let alone streaming.

It will be interesting to see how this plays out. Even if these Swedish artists fail to pressure the labels to revise their contracts, they will be proving a point worth making all over the world: that when artists and commentators consider Spotify’s payouts to artists, they should take into account not only the fairly serious time lag, but the path that money takes from Spotify to them.

Herrey, the Swedish Musicians Lawyer, would not divulge which artists were involved, and said that he hopes the matter can be resolved through negotiations rather than a lawsuit. He also points out that this case, the first of its kind, could have implications as a precedent for musicians in other locations as well.

“We have been approached by a handful [of artists], but it is much more affected by this,” he said, according to Google’s translation of the original article.

Update: Billy Bragg has joined the fray in a Facebook post (via The Guardian) along the same lines:

I’ve long felt that artists railing against Spotify is about as helpful to their cause as campaigning against the Sony Walkman would have been in the early 80s. Music fans are increasingly streaming their music and, as artists, we have to adapt ourselves to their behaviour, rather than try to hold the line on a particular mode of listening to music.

The problem with the business model for streaming is that most artists still have contracts from the analog age, when record companies did all the heavy lifting of physical production and distribution, so only paid artists 8%-15% royalties on average.

Those rates, carried over to the digital age, explain why artists are getting such paltry sums from Spotify. If the rates were really so bad, the rights holders – the major record companies – would be complaining. The fact that they’re continuing to sign up means they must be making good money.

Here in Sweden – where I’m doing a show tonight in Malmo – artists have identified that the problem lies with the major record labels rather the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit.

  • Mai Katayama

    Super great that they’re doing this (it’s important to get mad at the right entity), but then they kind of undo it by still taking it out on spotify. It’s their record contracts, not spotify’s. But at least it’s a step in the right direction. As a streamer (mainly Rdio and torch music) I would greatly prefer that the royalty money go to the artists and not some overpaid exec who doesn’t do enough anymore to warrant taking such a large cut. I think within a few years this idea will be better ironed out.

  • Dave Allen

    Fighting for the “way things used to be” is a lost cause. The winners here will be the lawyers. Billy Bragg is absolutely correct – musicians have to look to how music fans want to access their music in a mobile world. If artists have signed a deal with a label then that’s a deal. It’s hard to undo an arrangement that was not forced upon musicians.

    As I wrote here musicians will see themselves on the wrong side of history if they decide to try and return to some nostalgic Golden Age of music that never existed in the first place.