Ferrick’s accusations were made toward Spotify’s inconsistent obligation with the Harry Fox Agency, as well as its failure to file Notices of Intention (NOI’s) for mechanical licenses. Spotify took initiative to seek The Harry Fox Agency’s help in matching their recordings with compositions, but still failed excessively. By sending NOI’s to copyright owners, Spotify attempted directly notifying users of its use of their material.
The fault at large is what the industry refers to as the “data problem.” This is mostly due to the divisive result of any song in streaming having split copyright definition: one copyright for musical composition (music and lyrics), and a separate copyright for the recording (by a recording artist and/or producer). These copyrights are administered separately, as publishers focus on compositions and record labels focus on on recordings. The compelling issue is that a composition and a recording can live entirely separate lives in the music industry, without really crossing paths. Throughout history, music publishers have maintained greater responsibility than labels for maintaining and preserving data. This includes data ranges from revenue percentages, sample data, to blanket licenses — most of which can be incomplete, or inconsistent crossing foreign territories.
With interoperability in the works, it is still as difficult to create complete and accurate data now for publishers, performing rights organizations and mechanical rights societies. This $43 million settlement is intended for paying out royalties. Spotify is required to approach this initiative from multiple angles. The first step is providing all track and stream data online and accessible to al rights holders. This is so songwriters, publishers, and representatives can search and claim royalties. Secondly, it requires conversation between publishers, Performing Rights Organizations, and streaming sources to divide a better system for registering and organizing data, specifically to improve mechanical licensing. Understandably, the underlying conflict is one to be confronted by all members of the industry.
It is a constant attempt these days for the music industry to innovate in the backlash of the “data problems”. This conflict ignites many organizations to represent copyright and royalty data more transparently, including Songtrust, Open Music Initiative, STEM, as well as the European PRO union ICE. The hope is that following this case, Spotify’s requirements result in building a data sharing model that other streaming services will be encouraged to follow.
From global royalty collection specialistSongtrust.