By now, the streaming wars are in full swing. Stiff competition between platforms like Spotify, TIDAL and now Apple Music has brought light to how much artists are actually getting paid from those services, and those numbers are always pretty low—to the extent that individual artists are striking back. Spotify, however, has always attempted transparency, releasing their revenue and subscription numbers with regularity.
The issue, however, boils down to an age-old problem: the labels are profiting from the streaming model, but the artists are only seeing a fraction of a fraction of the payout. Now a new lawsuit is putting a lot of those claims on front street.
19 Recordings is taking Sony to court, alleging that the record company is robbing artists because of how streams are treated as “sales” as opposed to “broadcasts” or “transmissions,” which makes a world of difference when it comes to sharing profits. When a song is treated as a “broadcast,” the label is forced to split the profits evenly. When they’re treated as “sales,” (like at a record store), the label slices up the money pie in their favor. The lawsuit, seeking $20 million from compensatory damages, claims that the record label is protecting their value in Spotify, by giving the streaming service better royalty rates with them. Meaning the cash-outs they see don’t have to be shared with artists.
Last month a leaked contract between Sony and Spotify surfaced and exposed the fact Sony is not only making money from streaming, but they could potentially be making profit off the ads they get at a discounted rate.
Read the full story and its implications over at Billboard.