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Why Is Tom Petty Suing Spotify and How Does This Relate to the Music Modernization Act?

Updated: Dec 14, 2019


The music streaming service Spotify can’t seem to stay out of the news lately.

[Don't miss the funny parody of Warren Buffett's imagined lecture at the first Spotify board meeting after the IPO dust settles in a few weeks]

The end of 2017 and beginning of 2018 has seen a flurry of activity as headlines reveal another $1.6 Billion Dollar Lawsuit against the tech streaming online distribution company, this time by Wixen Music Publishing, who represent compositions by Neil Young, Tom Petty, Rage Against the Machine and others.

This latest lawsuit joins nearly half a dozen other class action / lawsuits against Spotify by independent music creators and rights administrators filed in the past two years.

“The Trichordist” blog collaborator, Cracker and Camper Van Beethoven front man, David Lowery of Athens, Georgia and songwriter Melissa Ferrick successfully sued Spotify and settled with a $43.4 Million Fund for unpaid songwriter and publisher royalties last year.

Around the same time the NMPA (National Music Publishers Association) also stepped in and made their own $30 Million settlement with Spotify as reported by Robert Levine in Billboard in May of 2017. [Source cited below]

Nashville / Texas based Bluewater Music Services Corp filed a lawsuit against Spotify in 2017, led by champion of the underdog attorney Richard S. Busch, the same lawyer who represented the victorious Marvin Gaye estate in their “Blurred Lines” infringement case, and helped Eminem successfully stand up to EMI when his rights were being squashed in the name of commerce.

The Bluewater suit and yet another Spotify lawsuit by an independent music publisher, Rob Gaudino are both detailed in this Variety article “Spotify Faces Two New Lawsuits From Music Publishers” by Janko Roettgers in July 2017. [Sources below]

These lawsuits highlight Spotify’s ongoing battle to do business with its suppliers, the songwriters and music publishers who are forced through federal regulation to make their material available to Spotify and other streaming companies against their will through a practice known as Compulsory Licensing, whereby the rights owners are not permitted to deny usage of their intellectual property.

What kind of negotiation can actually happen if one party cannot walk away? Not much, we are proving.

In international comparison, it can be seen that the only time compulsory licensing is used to force use of intellectual property is when it involves pharmaceutical patents for life saving drugs.

No where else in the world are songwriters so actively forced to make their material available in the commercial marketplace, while at the same time, retaining no rights to set the price of their self created commodity.

In the United States the compulsory licensing law is used to control the music marketplace in a way that unfairly disadvantages independent creators, while binding many of the smaller, less moneyed independent publishers to larger industry groups such as the NMPA (National Music Publishers Association) who have a tendency to make deals that bind us into low, stagnate rates and release our right to litigate further through liability releases for offending tech companies.

For example: the mechanical royalty rate (the amount songwriters and publishers are paid for each recording of their song sold) was initially set by Congress in 1909 at 2 cents per unit.

The NMPA was founded in 1917 as a trade organization representing all American music publishers.

Adjusting only for cost of inflation would have generated a present day mechanical royalty rate of around 50 cents per unit for songwriters and publishers.

However, the mechanical royalty rate stayed the same from 1909 until January 1978 when the Copyright Act of 1976 was enacted.

Who led the charge on that great day? Was it an established advocacy group? No sir.

It was none other than “Joy to the World (Joy to the Fishes),” “Ain’t Never Been To Spain” songwriter and actor Hoyt Axton.

Where were our advocacy groups during that long stretch?

While any move toward reform of our broken licensing system is welcome, Songpreneurs must caution our readers to think long and carefully before willy nilly following the leader on this one, and that goes for ourselves as much as for anyone else.

What do we actually know about these bills, and how are our interests reflected in their pages?

Not being a politician, attorney nor policy maker ourselves, we are hesitant to throw full support behind anything we do not fully understand, just as the Sage “Oracle of Omaha” Mr. Warren Buffett famously did not invest in technology stocks for which he had insufficient knowledge of the underlying framework required to run the business correctly and ethically.

As advocates of Principle Based Business ourselves, it is important to note the latest and possibly most interesting and positive bit of Spotify related news to hit the screen the past few days – the rumors of the Spotify IPO (initial public offering of stock to buyers other than the major label / publisher owners they already have on board.)

As a recent student of Snowball: Warren Buffett and the Business of Life, the biography of Warren Buffett by Alice Schroeder, Songpreneurs founder Amanda Colleen Williams fashioned this humorous imagining of how the first board meeting at Spotify might go after their IPO trading dust settles and the new board members assume their seats in a few weeks:

Please feel free to share or embed the above Sound Cloud link if you like it. https://soundcloud.com/user-190464352/spotify-board-meeting-warren-buffett-parody-1

Catch more of the action at the upcoming inaugural Artists Rights Symposium hosted by The Music Business Certificate Program, Terry College at University of Georgia Jan 22-23 along with David Lowery, T Bone Burnett, Rep. Doug Collins, Blake Morgan of #iRespectMusic and other notable artists rights representatives.

Registration is free and open to the public, but limited. Call Music Business Certificate Program for more information 706-542-7668.

We can all get on the same page with this Copyright Reform movement if we will be open minded, patient, and receptive to new ideas, instead of rushing around behind closed doors trying to force consensus of the underrepresented. #SongwriterVoices

Sources:

Levine, Robert (2017, May 26). Spotify Settles Class Action Lawsuits Filed By David Lowery and Melissa Ferrick With $43.4 Million Fund. Billboard. Retrieved from

https://www.billboard.com/articles/business/7809561/spotify-settles-class-action-lawsuits-filed-by-david-lowery-and-melissa

Roettgers, Janko (2017, July 18). Spotify Faces Two New Lawsuits From Music Publishers. Variety. Retrieved from http://variety.com/2017/digital/news/spotify-faces-two-new-lawsuits-from-music-publishers-1202499249/

Schroeder, Alice. (2009) The Snowball: Warren Buffett and the Business of Life. New York: Bantam Books.

Who You Gonna Call? University of Terry College Artists' Rights Symposium Jan 22-23 Trichordist Blog Retrieved from https://thetrichordist.com/2017/10/24/who-you-gonna-call-university-of-georgia-terry-college-artists-rights-symposium-jan-22-23/

US Copyright Office Circular Mechanical Royalty Rates. Retrieved from https://www.copyright.gov/licensing/m200a.pdf

Special shout out to George Johnson for sharing the inflation ideas with us.

#Spotify #lawsuit #TomPetty #RageAgainsttheMachine #WarrenBuffett #MusicModernizationAct #Wixen #musicpublishers #NMPA #NationalMusicPublishersAssociation #Trichordist #DavidLowery #MelissaFerrick #RobertLevine #Billboard #BluewaterMusicServicesCorp #RichardBusch #MarvinGaye #EMI #Eminem #compulsorylicense #negotiation #UnitedStates #advocacy #mechanicals #royalty #HoytAxton #Songpreneurs #IPO #principle #ethics #TBoneBurnett #BlakeMorgan #Georgia #DougCollins #representatives #SongwriterVoices #independents #RobGaudino #headlines

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