The National Music Publishers' Association's (NMPA) war with Spotify continued at its annual meeting held Wednesday (June 12) at Lincoln Center's Alice Tully Hall.
Addressing the publishing executives present, NMPA CEO/chairman David the Israelite announced that the agency has filed a formal complaint with the Federal Trade Commission (FTC) and sent letters to the attorneys general of nine states as well as consumer trade groups to try to prevent Spotify from reclassifying its premium tiers as “bundles” — a classification that allows the streamer to pay a lower mechanical royalty rate in the United States.
The NMPA alleges that Spotify has violated the Restoring Online Consumer Confidence Act (“ROSCA”), Section 5 of the FTC Act, and various consumer protection laws.
As Advertising sign previously reported, the issuers expect a loss of $150 million in US mechanical media in the first year of the combination reclassification compared to the amount the issuers would have been paid had it never occurred. The reduced payments began in March without prior notice, according to the NMPA and the Mechanical Licensing Collective (the MLC). However, Spotify believes it is playing by the book by making the change to how it pays for US mechanical royalties, as it has “bundled” audiobooks with the other offerings included in the streamer's premium plans.
“Spotify has declared war on songwriters,” Israelite said at Wednesday's meeting. “Our response will be comprehensive.” Israelite noted that the NMPA (as well as the MLC) has taken several actions to stop Spotify's bundling reclassification already. The organization's sweeping retaliation began with statements against the company in March, followed by a cease-and-desist letter in May in which the NMPA threatened to file a lawsuit against Spotify for allegedly using music and lyrics in some of its podcasts and videos without permission. . (Spotify called the move a “press stunt” by the NMPA).
“Our letter was more than just a warning shot and NMPA has never lost a lawsuit. So you'll want to stay tuned,” Israelite added Wednesday.
Just days after the NMPA threatened legal action, MLC sued Spotify for “improperly” reclassifying its premium tiers as bundles.
The following week, NMPA wrote to the Judiciary Committees in both the U.S. House and Senate asking for a review of the statutory license in Section 115 of the Copyright Act, which binds publishers to strict regulations and rules about what they can charge streaming services for mechanics in the US. This action is believed to be a long game (and, for some, a long shot).
In NMPA's letter to the FTC, obtained by Advertising sign, general counsel Danielle Aguirre wrote: “The [NMPA] writes to urge FTC to crack down on Spotify's illegal conduct that harms millions of consumers and the music market… Spotify has defrauded consumers by converting millions of its subscribers without their consent from music-only subscriptions to “bundled” audiobook and music subscriptions , publicly announcing increased prices for these subscriptions, failing to offer subscribers the option to revert to a music-only subscription, and thwarting cancellation attempts through obscure patterns and confusing website interfaces. This bait-and-switch subscription program “burdens shoppers with recurring payments for products and services they didn't intend to buy or didn't want to keep buying.”
Aguirre continued, “Indeed, it has all the red flags of the problematic opt-out practices that the FTC consistently warns companies about: (1) Spotify failed to give consumers all material information about its subscription plans from beforehand. (2) Spotify has charged consumers without their informed consent. and (3) Spotify has made it difficult for consumers to cancel.”
Other letters of complaint were also sent to the attorneys general for nine states, including California, New York, Tennessee, Colorado, Georgia, Connecticut, Illinois, North Carolina, Oregon and Washington, D.C. In NMPA's letter to the New York office chief of office of fraud and consumer protection as well as the state's assistant attorney general, obtained by Advertising sign, Aguirre wrote: “We urge your office to investigate and address Spotify's conduct as well. Spotify… has engaged in a bait-and-switch subscription program.”
Letters were also sent to consumer groups including the National Consumers' League, the Consumer Federation of America, Public Citizen Consumer Action and the National Consumer Wealth Center in hopes of sparking a class action lawsuit.
NMPA's recent moves are supported by representatives Ted Lieu (D-CA), Adam B. Schiff (D-CA) and Marsha Blackburn (R-TN) via a letter sent Wednesday to Shira Perlmuttercopyright registrar and director of the US Copyright Office.
In the letter, the three representatives wrote: “As members of the Judiciary Committee, which created the Music Modernization Act, we want to see the law faithfully implemented and copyright owners protected from harm resulting from bad faith. exploitation of the compulsory system. Digital service providers should not be allowed to manipulate statutory rates to reduce royalties, deeply undermining copyright protection for songwriters and publishers. A fair system should prevent any big tech company from setting its own price for someone else's intellectual property, whether the owner wants to sell or not.”
Every year, the NMPA has been known to announce major breaking news at its annual meeting — usually against tech companies that, in its view, aren't paying for songs properly. Last year, Israelite announced a $250 million lawsuit against Twitter, which is still ongoing. In previous years, NMPA has gone after Twitch, Peloton, Roblox and others.
“We will see what the Federal Court in the Southern District of New York, the United States Congress, the Copyright Office, the Copyright Board, the FTC, many Attorneys General and consumer advocacy groups have to say,” Israelite told the host. Wednesday. “Most importantly, we'll see what the songwriters and music publishers who make the product that allows Spotify to exist have to say.”
from our partners at https://www.billboard.com/pro/nmpa-spotify-bundling-war-continues-ftc-complaint/
