National Music The Publishers Association has filed a complaint with the Federal Trade Commission against Spotify over the streaming giant's controversial audiobook bundle offer that led to reduced royalties for songwriters, with the trade group calling the strategy “a scheme to increase profits by deceiving consumers and the music rights System.”
NMPA CEO David Israelite Reveals FTC Complaint — Reviewed by Rolling rock — during his address to the trade group's annual meeting in New York on Wednesday afternoon about what he called “Spotify's unfair, deceptive and fraudulent business practices.”
“Spotify has declared war on songwriters,” Israelite said Wednesday. “Our response will be comprehensive.”
The NMPA's dispute with Spotify began several months ago when Spotify added audiobooks to its premium subscription tier and offered the music and books as a bundle. This move carries significant weight in the complex world of music publishing rights.
The rates for a certain type of royalty that songwriters receive from streams — called mechanical royalties — are determined not solely by rights holders or streaming services, but by the Intellectual Property Rights Commission, a three-judge panel housed at the Library of Congress. The CRB bylaws state that group deals could command lower royalty rates since the music is only part of a subscription package. As a result, Spotify claims it can underpay songwriters. the NMPA claims it will cost authors and publishers $150 million over the next year.
The move was predictably unpopular among songwriters' groups, who said Spotify was acting in good faith from the negotiations they had previously set out with publishers at the CRB hearings. The Mechanical Licensing Collective, the organization responsible for collecting mechanical royalties for songwriters since the Music Modernization Act was passed in 2018, sued Spotify over the package in May.
While the NMPA advocates on behalf of music publishers, given the FTC's role as a consumer protection agency, the group's complaint focused on the package's alleged impact on Spotify customers. The group alleged that Spotify violated the Internet Consumer Confidence Restoration Act because the streaming service switched its premium users to the bundle without their consent and failed to offer a music-only option for those who wanted to opt out.
“This bait-and-switch subscription program 'presents shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase,'” the NMPA alleges. The NMPA further claimed that the strategy gives Spotify “an unfair competitive advantage because it can now offer the same content as its competitors at a fraction of the cost”.
A spokesperson for Spotify did not immediately respond to a request for comment on the FTC complaint.
The complaint is just the latest move in the NMPA's aggressive approach against Spotify over the package. Last month, the band hit Spotify with a pause and extension over claims the streaming giant is infringing on its members' musical works through lyrics, music videos and podcasts on the platform. Spotify called the move “a journalistic stunt full of false and misleading claims” and “an attempt to deviate from the deal the NMPA agreed to and celebrated in 2022.”
Weeks after the cease and desist, the NMPA wrote a letter to Congress calling for changes that would allow issuers to opt out of the blanket licensing rate set by the CRB and allow them to negotiate on their own.
In addition to the FTC's complaint, NMPA also sent letters to 10 attorneys general, including New York, California and Tennessee, encouraging their offices to investigate as well. Further, NMPA has also reached out to various consumer advocacy groups such as National Consumers Union, Consumer Federation of America, Public Citizen.
“For anyone who thinks this is too much, welcome to the package version,” Israelite said in his speech on Wednesday. Spotify has an exit ramp, it can reverse course. Based on the past I have no expectation that will happen. But it's not too late to do the right thing.”
from our partners at https://www.rollingstone.com/music/music-news/music-publishers-file-ftc-complaint-against-spotify-1235037089/