Spotify pulling out of Uruguay is bad for the whole music industry but it also fails to address the need for greater transparency along the royalty payment pathway.
Overnight Spotify made a statement that it would begin phasing out its service in Uruguay from 1 January next year in response to copyright reform to introduce ‘equitable remuneration’ for local musicians. According to Billboard and others, the Spotify service will close in Uruguay by February 2024. Obviously such action is bad for musicians, music fans, the music industry and for Spotify but this latest dummy spit by the service continues the practice of opacity in relation to the use of copyright material by platforms.
The stoush comes after the Asamblea General (General Assembly) of Uruguay passed legislation to increase royalties received by local musicians. Spotify’s concern is about who will have to pay up. According to Spotify, it is unclear whether music streaming services or rights owner organisations will be responsible for the increase in royalties under the scheme. It is reported a spokesperson for Spotify said in a statement: “Spotify already pays nearly 70% of every dollar it generates from music to the record labels and publishers that own the rights for music, and represent and pay artists and songwriters. Any additional payments would make our business untenable.”
The validity of such a claim is difficult to determine, but just last month the music streaming service reported that total revenue grew 11 per cent year-over-year (YOY) to €3.4 billion in their Third Quarter 2023 Earnings. While the numbers are boggling, what they mean for individual musicians is harder to ascertain. Industry initiatives such as Spotify’s own Loud & Clear website are glossy PR efforts to ‘do transparency’ that gloss over the real data needed to analyse and scrutinise royalty payments in any meaningful way for artists.
As Cory Doctorow and Professor Rebecca Giblin explore in Chokepoint Capitalism, platforms use anti-competitive models to lock in users and suppliers to eliminate competition and drive down what they pay to artists and suppliers. A lack of transparency around royalty payments data is part of the flywheel.