Alice Xie is an IPilogue Writer and a 1L JD Candidate at Western University’s Faculty of Law.
Do you remember contemplating whether you liked a trending pop song enough to spend $4.99? With the rise of online streaming services like Spotify and YouTube over the last two decades, listening to music has arguably changed for the better. However, with the convenience of streaming music through these digital platforms, the music industry has also had to deal with a wide range of copyright issues, including online copyright infringement. A look at streaming giant Spotify’s recent significant copyright battles provides some insight into the issue of compensation for artists’ work on online streaming platforms.
Spotify’s Recent Significant Battles
Spotify has encountered its fair share of copyright infringement lawsuits filed by music artists, record labels, and publishers. In 2015, guitarist David Bowery filed a lawsuit against Spotify USA, a Spotify subsidiary, for streaming songs without first obtaining mechanical licenses, which are the standard payment for reproducing or distributing a song. Spotify settled the lawsuit with $43.4 million. In 2017, music publishing company Wixen also filed a lawsuit against Spotify USA, seeking $1.6 billion. Wixen claimed that Spotify improperly licensed 10,000 songs from its represented artists, which resulted in the artists and publishers not receiving royalties when customers streamed their work. Spotify and Wixen mutually agreed to dismiss the lawsuit in 2018. In 2020, two entertainment companies filed 11 separate lawsuits against Spotify and other streaming services for not receiving royalties for their streams. The issue of inadequate artist compensation is not unique to Spotify, but applies to all streaming services.
New Copyright Law: A Solution for Spotify
The relevant US copyright law is section 115 of the Copyright Act, which states that a person or entity seeking to distribute a musical work must first obtain a compulsory license. One can obtain a compulsory license by filing a notice of intention (“NOI”). In 2018, the US Congress passed a law called the Music Modernization Act (“MMA”), which seeks to alter the licensing system for the better and take charge of the compensation process. Title 1 of the MMA is especially relevant, as it establishes a blanket licensing system for digital music providers. The blanket licensing system covers all musical works available for compulsory licensing, which means that streaming services will no longer need to file an NOI for each song or work. The MMA also established the Mechanical Licensing Collective (“MLC”), which administers the blanket licenses and more notably, maintains a public database containing information on the musical works and their copyright owners, if known. The law was set to take effect in 2021.
Inadequate artist compensation may be partly explained by the difficulty of accurately identifying the rightsholders of each work, given the volume of music works. Digital service providers cannot locate the recipients of royalties. Lesser-known music artists are even more vulnerable to copyright infringements in this way. The MMA ideally solves this difficulty through the public database, which centralizes all information relating to musical works into one place. This provides parties like streaming services seeking compulsory licenses with a recognized source of rightsholders from which to draw. Additionally, the database validates artists’ possession over their works that will not be easily taken. If correctly implemented, the MMA can advance the collective goal of creating a digital music ecosystem where streaming services grow their platforms by legally acquiring distribution rights and artists, publishers, and record labels are rightfully compensated for their work. We may look to future copyright infringement cases to inform the MMA’s effectiveness.