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Spotify, Google Appeal Ruling That Boosted Songwriter Payments

A man checks his smartphone whilst standing amongst illuminated screens bearing the Spotify Technology SA logo in this arranged photograph in London, U.K., on Tuesday, June 26, 2018. Spotify Technology SA hired Dawn Ostroff as its chief content officer, tapping a Conde Nast entertainment executive to oversee music, audio and video partnerships. Photographer: Chris Ratcliffe/Bloomberg

Spotify Technology SA and other technology giants appealed a ruling that increased the royalties they must pay to songwriters, a move that threatens to further damage the companies’ already-tenuous relationship with the music industry.

Songwriters celebrated last year when the Copyright Royalty Board ruled that they will get at least a 15.1 percent share of streaming revenues over the next five years, a raise from the previous rate of 10.5 percent. The bump, which came in January 2018, was the biggest ever, the National Music Publishers Association said at the time.

But music-streaming services, most of which are either lose money or only eke out a small profit, warned the change would make it harder to operate. They also complain that the ruling was made without enough input from them.

The board’s decision “raises serious procedural and substantive concerns,” Spotify, Amazon.com Inc., Alphabet Inc.’s Google and Sirius XM Holdings Inc.’s Pandora said in a statement. “If left to stand, the CRB’s decision harms both music licensees and copyright owners.”

Streaming Share

Songwriters have long complained they receive too small a share of sales from streaming, which now accounts for 75 percent of the business in the U.S. — the world’s largest music market. The rates under discussion in this case govern payments from on-demand services such as Spotify and Apple Music, which make up the vast majority of streaming sales.

The technology companies waited until the last day to appeal the decision, undermining their recent efforts to court songwriters, said David Israelite, chief executive officer of the NMPA.

“I’m sure it was their strategy of how best to screw over songwriters,” Israelite said. “It pulls away the disguise of being friendly.”

Israelite said Apple is the one tech heavyweight that didn’t appeal the case. A spokesman for Apple didn’t immediately respond to a request for comment. DM

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