
Spotify Hit with $150M Class Action Over Unpaid Royalties - sageabilly
http://www.billboard.com/articles/business/6828092/spotify-class-action-royalties-david-lowery-cracker-150-million
======
6stringmerc
I have mixed feelings about this particular case, because on the one hand,
yes, I want artists compensated fairly, and on the other hand, I do hold the
belief that Spotify is putting a good-faith effort towards paying musicians
and "rights holders" day in and day out.

I'd like to see this case actually go to court, if anything so that it would
force all three parties - Lowrey, His Label(s)/Management/Publisher(s), and
Spotify - to provide some documentation regarding how this system actually
works. My understanding, for good or ill, is that Spotify points the finger at
royalty collection societies / labels / publishers / etc when possible (and
not forbidden by contract or NDA), and royalty collection societies / labels /
publishers / etc tell artists to blame Spotify. I'm not fond of the murky
arrangements what so ever!

Getting a good, clear understanding of the mechanics would be nice, well, for
other artists like Lowery. Could this case show that Lowery's own management
and labels haven't been doing their part to get him his money? I'm curious.
Will the case ever go to court, or is it maybe more of an avenue to try and
get a settlement check? I could see that happening too.

I might be in the minority as an independent, but I've been quite pleased with
the reporting and transparency by Spotify, iTunes, et al by way of my
distribution firm, and therefore have no real basis to feel compelled to try
and join the suit.

~~~
Avenger42
Yeah, it makes me wonder whether his complaint is really with his label, but
he can't sue his label without creating friction. So he sues Spotify, Spotify
performs discovery which shows his own label is withholding these royalties,
he turns around and sues his label (or more likely, settles with them).

Better still - what if Spotify turns out to be right, and he didn't provide
the required information to Spotify to allow them to pay him his royalties, so
his complaint is really with himself?

~~~
6stringmerc
Agreed! I don't think there's any chance he could get a class action status
against his own label, but he successfully got out in public quite a while ago
bitching about how he made roughly $17 for a milllion streams of "Low" and
that got his profile up. My gut instinct is that the "willful infringement"
isn't going anywhere, and after a critical breakdown of accounting, Lowery is
probably owed another check that could buy him lunch at Chili's. This doesn't
seem anything close to the kind of heavyweight punch that Eminem threw at
Universal over royalties.

You're right though, if he's at fault for not getting himself paid, that'd get
a chuckle out of me, and also another facepalm for an instance of a musician
who should stick to the music part and not the businessman/activist part.

~~~
bsder
I suspect that the main point is to drag the accounting into the light.

Both Spotify and the record companies are going to be in for a shellacking if
they let this go to trial given that both of those parties are carrying on
some very shady money games.

------
sandstrom
Record labels was useful historically, because they handled distribution
(physical stores, CDs, different countries).

Nowadays, record labels are a PR-agency at best and should be compensated as
such. Artists getting a 10-20% slice[1], the typical revenue-split, sounds
like a rip-off to me.

A good artist, using Instagram/YouTube/FB/website + Spotify/Rdio for
distribution doesn't need much help from a label. Sure, a producer, studio, PR
manager and other staff is useful, but that doesn't motivate a 90% cut of
profits (in my view).

[1] [http://www.wsj.com/articles/artists-press-for-their-
share-14...](http://www.wsj.com/articles/artists-press-for-their-
share-1405905178)

~~~
pbreit
You could easily argue the labels create all the value. They can pretty much
turn any type of talent into bankable star.

~~~
kalleboo
And in thst world I almost prefer the honesty of the Korean/Japanese music
factories where the singers just get salaries instead of this whole system of
Hollywood accounting where an artist is just an expense account with all
expenses to be paid to their label, never to go into the black...

------
brownbat
We've hit a weird period where if I hear about a song, like Lowery's Almond
Grove, I can instantly listen to that song on demand on a legal service
without paying anything. (I don't even get a pre-roll video ad.)

The underlying economics here have changed from the 90s. Partly because of all
the price fixing back then,[0] but mostly things have changed along the lines
any economist would have predicted, once you add instant free duplication and
teleportation of bits to the world.[1]

A right is a right, and Lowery makes great stuff so I want him to get some
return. But it seems like he keeps starting fights with all the places trying
new business models, trying desperately to fight against the economics. He's
picking fights with the few holdouts still trying to trade music for actual
money.

He's capsizing all the lifeboats because he's angry at the sinking ship. It's
like he doesn't understand he's at sea.

[0]
[http://usatoday30.usatoday.com/life/music/news/2002-09-30-cd...](http://usatoday30.usatoday.com/life/music/news/2002-09-30-cd-
settlement_x.htm)

[1] ie, Price tends towards marginal cost. Overly simplistic maybe, but this
is an awfully provocative case study: negligible marginal cost and pricing at
effectively nothing.

------
yzh
Actually I have a question regarding spotify's payment model: I heard that
every subscriber's payment are put in a big pool, and artists are paid
according to their global click/listening rank. If this were true, then when I
pay 10 dollar's per month and all I listen to is Carsick Cars (my favorite
Chinese indie band), still the majority of 10 dollars will go to Justin Bieber
and Adele. Is that right? Another model is to pay the artist according to each
subscriber's stats. For example in my previous example, all my payment (except
those for Spotify) will go to Carsick Cars. Additionally, I'm wondering which
of the above payment model is fair to both the audience and the artists?

~~~
zik
If all you listen to is Carsick Cars then their global ranking will be boosted
and assuming that you listen an average amount all your royalty money will go
to Carsick Cars. If you listen a greater than average amount then even more
money will go to them.

~~~
bsdetector
There's a minimum payout, so unless you listen to your neighborhood band a lot
then they still get nothing and all of your $10 goes to bands you never even
listened to.

The Spotify model even encourages people to _not_ listen to music. Putting
your music library on shuffle and turning off the speakers is the best way for
a paying subscriber to get money to the bands they like. Streaming an
excessive amount on mute also takes money from other bands that you don't like
and redirects it to your favorites. Even better, sign up for an ad-supported
account, play your favorites on mute, and the artists will get even more money
per play.

It's a terrible model that rewards people for abusing it. Splitting your $10
among your bands is a much better model, but they won't do it because ads
don't pay enough so they mix together ads and paid accounts so they can get
more listeners. Spotify model is good for Spotify, but not for anybody else.

------
shortformblog
David Lowery has a history of doing stuff like this. I love his music, but
he's become a bit of a troll on this issue in recent years. (See his blog The
Trichordist: [http://thetrichordist.com/](http://thetrichordist.com/))

His most recent post does a pretty good job of pointing out where he stands on
this issue: [http://thetrichordist.com/2015/12/24/the-mother-of-all-
frida...](http://thetrichordist.com/2015/12/24/the-mother-of-all-friday-news-
dumps-spotify-admits-it-has-an-unpaid-royalty-problem/)

Personally, I want to see Lowery make a few more bucks off of "Eurotrash Girl"
and "Take the Skinheads Bowling," but his approach to the issue seems to have
a take-no-prisoners vibe to it, which is too bad because it sort of undercuts
a lot of the fairly valid points he might have. He's not afraid of going after
listeners, which is a bummer because the listeners are probably less at fault
in this case than the labels are. (He also looks like an older Chuck Johnson
these days, which doesn't help matters on that front.)

No matter the complaints about tone or anything like that, we definitely need
guys like Lowery making the case for artists. But he might win more support if
he were to take some style tips from Taylor Swift [1] on the issue. Swift has
done more on this whole issue than Lowery has and she hasn't once had to
resort to making fun of an intern who doesn't buy CDs.[2]

[1] [http://www.techtimes.com/articles/75173/20150813/taylor-
swif...](http://www.techtimes.com/articles/75173/20150813/taylor-swift-
attacks-spotify-again-while-praising-apple.htm)

[2] [http://www.stereogum.com/1069672/david-lowery-on-file-
sharin...](http://www.stereogum.com/1069672/david-lowery-on-file-
sharing/news/)

------
iamleppert
Is music really worth this much? I mean, its intrinsic value to society? It's
normally used as the backdrop to a party, or exercising, or some other such
thing, but really, $150,000 per song?

Why can't we put a clamp on the problem of every random artist thinking
they've created something that lasts a few minutes and has more value than
most people make in a year?

The entire system of copyright and recorded art needs to be abolished, and any
music that is recorded instantly becomes the public domain. This would do away
with many industries that serve almost no purpose for society, other than to
attempt to extract value where no value has been created.

The conventional way for artists to make money should come from performance.

~~~
fletchowns
> It's normally used as the backdrop to a party, or exercising, or some other
> such thing

This is way off. Music changes peoples lives. It defines generations. To many,
it is one of the most important things in the world.

> The entire system of copyright and recorded art needs to be abolished, and
> any music that is recorded instantly becomes the public domain.

No way, artists deserve to be paid for their works.

~~~
toomuchtodo
> No way, artists deserve to be paid for their works.

Unfortunately for the artists, what they value their work at (living income)
and what the market does (close to zero) is drastically different.

You can't will music to be worth something because you're nostalgic over times
gone by.

~~~
thegayngler
People are stealing the music. If they actually made the music unavailable to
streaming services then the artists have a shot at people actually purchasing
the music. I actually think that they need to double the price of
subscriptions. People listen to music as much as they watch TV and maybe even
more so... Cable TV doesn't give you unlimited everything but we pay like 10x
that per month and we still have to listen to the ads in many cases. So I
definitely think maybe they need to hike the price to $25 or $30 per month.

~~~
learc83
>then the artists have a shot at people actually purchasing the music.

Or they'll just pirate it.

>So I definitely think maybe they need to hike the price to $25 or $30 per
month.

Spotify will charge what the market will pay. They think that $10 a month is
the sweet spot, any more and they will lose more revenue in lost subscribers
than they gain.

>Cable TV doesn't give you unlimited everything but we pay like 10x that per
month and we still have to listen to the ads in many cases.

And cable TV is currently losing subscribers. I'm not sure that's a business
model you want to emulate.

------
2close4comfort
David Lowrey has a pretty long history of hating on digital media and while
some is very well founded, some is "Hey you kids back in my day..." BS. I
think he is someone that was comfortable in the old business and doesn't want
the burden of selling placed on him and wants the Label to sell. But now if
you are clever you can find ways to both have a traditional arrangement and
appeal directly to your fans who would gladly help support him.

------
callesgg
My understanding was/is that spotify goes in to agreements width record labels
and the record labels provide spotify with music.

If i am right about that, then the record label that provided the music would
be at fault. As they sold material that they did not have the rights to sell.

I guess you could find them at fault as they are not verifying what they are
getting. But that would not be a civil case.

~~~
dpkp
Labels deal in sound recordings, which have historically been licensed
independently of the underlying music compositions. Most distributors like
Spotify will obtain separate licensing for compositions, whether from
collecting societies like ASCAP, BMI, or SESAC, and/or through direct deals
with artist / publishers themselves.

This setup may seem odd, but but it has historically been used to provide some
protection against labels "screwing" artists - b/c although a label takes the
sound recording rights and therefore controls royalty payments back to artists
for the recording [if any -- after recoupment, etc], the artist typically
retains their own publishing rights and can license those separately for $$
not subject to their label deal (though subject to cuts from societies, and
their individual deals with publishers etc). This opens up new revenue streams
for artists to get paid outside the control of their label: by radio
stations/bars/restaurants via PROs, or in sync-right deals for placement in
movies or on TV.

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devindotcom
FYI, it's not class action yet and the $150m is the maximum based on the
statutory damages the complainant details. I'm not a lawyer, the headline just
seems to kind of jump the gun a little.

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davidgerard
This looked plausible until I saw it was David Lowery.

I predict this will go nowhere.

------
merb
The problem with all the music platforms and labels is that all platforms made
a wrong decision when saying we are licensing all this stuff.

They should've just done a platform where the label needs to pay and could
upload the stuff. Something like "pay X per uploaded song and X per traffic
done", but get the rest off the revenue of the song. However at the moment the
royalties stuff is way more complicated than it should be.

------
jupiter90000
Has anyone seen a link to the actual document filed to court for the lawsuit?
I'd like to see it if so. Typically in class actions the lawyers take home the
bulk of the settlement, with those actually affected taking home small amounts
(except for perhaps named plaintiffs, with higher 'reward' payments than
others in the class).

------
bryanlarsen
What is the purpose of copyright? From the constitution "to promote the
progress of science and the useful arts".

To maximize the creation of intellectual goods, we should pay artists enough
money to have them enthusiastically create them, but no more. Of course, this
money should only get paid to people who are creating works that people want
to consume.

Our music copyright system has many problems, but I think it's fairly
remarkable that we've stumbled on what I believe is fair prices for it:
$10/mo/user or $15/mo/family for access to a full catalog, or ad-supported
free for access to radio-like streaming. Ad-supported free is pretty meagre,
but it was the government that set those rates, so we'll assume that's fair
for the sake of this argument.

While dividing that $10/mo up by play seems fair, it doesn't seem maximal. A
few artists get millions, most are lucky to get enough to get enough to buy a
cup of coffee. They might be making a meagre living touring, but once they
decide to have a family they give it up and get a real job.

I'd love to see log scaled payouts to address the problem. So if you A had 10x
as many plays as B and 100x as many plays as C, A would get paid 2x as much as
B and 3x as much as C. (using log10 for illustration -- the natural logarithm
or some other lower base would probably be better).

Such a change would be relatively easy to make for compulsory-licensed music
such as Pandora and other "Internet Radio". It would be harder to make for the
voluntarily-licensed music such as Spotify, though.

