It’s no secret that some artists aren’t fans of Spotify, and part of this has to do with the way the company handles royalties, but this isn’t a problem specific to the streaming service. Royalties have always been a complex issue, since they vary greatly between countries and different publishing agreements.
Spotify announced this week that the company is beginning work on a publishing administration to help ensure that artists are paid more fairly, and for some, more quickly. Part of the problem that the system is designed to solve is that sometimes, Spotify just isn’t sure who exactly to pay for a given track.
“When one of our listeners in the U.S. streams a track for which the rightsholder is not immediately clear, we set aside the royalties we owe until we are able to confirm the identity of the rightsholder,” a post on the Spotify Artists blog reads. “When we confirm the rightsholder, we pay those royalties as soon as possible.”
The company says that this amount totals less than 1 percent of the royalties it has paid to date. Still, considering that the company says it has paid “well more than $3 billion” in royalties to date, this could still be a sizeable portion of royalties that artists haven’t yet received.
The amount currently owed to artists and publishers for music played on its U.S. service — including the amount set aside for unconfirmed rightsholders described above — could range from $17 million to $25 million, Billboard reports.
“In the meantime, we have been working closely with our partners and friends in the industry, especially the National Music Publishers Association (NMPA), to find the best way to correctly pay the royalties we have set aside to the right publishers and songwriters,” Spotify’s blog post reads.
How much this system will help to solve a complex problem remains to be seen, but one thing is certain: it’s going to be a while until it is put in place. Spotify says its publishing administration system will take “significant time and effort.”
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