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October 29, 2013 by

Artists Fed Up With Low Streaming Royalties — Threaten to Sue Labels

2 comments

Categories: Digital Distribution, Music Industry, Music Publishing, Record Labels, Royalties

International music artists are fed up with low streaming royalty payments, and fed up with the labels getting a bigger cut of those royalties than the artists receive.  Warner and Universal Music are now facing possible lawsuits from artists unless they agree to increase the artists’ share of those royalties.  While The Guardian cites example figures in British pounds, today’s currency conversion rates show that while the artist could make roughly $800 on 1 million Spotify streams, the label would make over $7,000 for those same streams.  To further complicate things, some artists’ contracts pre-date the online wave and those artists’ royalty shares fall under the old model when online streams were not contemplated.  In addition, music publishers are joining the fight to complain they are not paid as much as labels from the digital streaming services.  (Source:  The Guardian — “Spotify row:  artists threaten to sue labels over music streaming)

Due to the speed of technology, many of the artists’ contracts are outdated in their terms even though the contracts themselves are still governing the relationships between artists and labels.  In this digital age, it is important for artist lawyers to attempt renegotiation of these older agreements to ensure artists are sharing fairly in the income from these new technologies and services.  The problem is that many labels may not be willing to renegotiate royalty terms.   In addition, major label contract terms often lag behind the times even for newly-signed deals, so it is important for the artist representative to stay current on industry trends and know which terms to update in deal negotiations.  Major labels have notoriously been somewhat behind the times in relation to many online and technological developments, and my prediction is that they will not be so willing to renegotiate a large number of contracts.  Sure, they might change terms for some of their most important (i.e. financially successful) artists, but I doubt they would do a long list of renegotiations without an influx of lawsuits — or at least the threat of them.

Technology definitely has a way of keeping the litigators busy…

© 2013 Erin M. Jacobson, Esq. All Rights Reserved. If you like this article and want to share it, please provide a link to www.themusicindustrylawyer.com or a direct link to the post for others to read it.

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Erin M. Jacobson is a practicing music attorney, experienced deal negotiator, and seasoned advisor of intellectual property rights. She protects clients ranging from Grammy and Emmy Award winners, independent and legacy artists, songwriters, music publishers, heirs and song catalogues, and other music professionals. Ms. Jacobson handles all types of contracts within the music industry, with an emphasis on music publishing and licensing. In addition, she sits on the Board of Directors for the California Copyright Conference and Association of Independent Music Publishers. Ms. Jacobson is a frequent speaker and author, with articles featured on Forbes.com and in other publications. Ms. Jacobson also owns and operates Indie Artist Resource , the independent musician’s resource for legal and business protection, offering high quality contract templates most needed by independent artists and songwriters.

2 Responses to Artists Fed Up With Low Streaming Royalties — Threaten to Sue Labels

  1. Todd

    Hello,

    I am a co-owner of a music production company. We basically craft music intended for TV/Film & Video Games.

    Recently, we decided to stream our own music in an attempt to make some extra $.

    We simply set our songs in a playlist and let it roll. Well, recently one of our distributors claimed these streams were “illegal” and refused to disburse royalties from the complaining retailer and further said we may be subject to future litigation.

    I have searched and searched for any legal precedent regarding this issue and am yet to find anything remotely close to this matter and was hoping you might be able to shed a little light on the subject.

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