Spotify Agrees to Pay $21 Million for Music Royalties

March 19
10:40 PM 2016

Spotify streaming service has reached an agreement to pay royalties to music publishers and songwriters. The company has settled an agreement with National Music Publisher's Association (NMPA) on Wednesday.

In its official press release, NMPA announced that both parties have achieved a landmark agreement. In the agreement, independent and major publishers are allowed to claim and receive royalties for certain compositions used on Spotify in the U.S., where ownership information was previously unknown.

With regards to the agreement, NMPA President and CEO David Israelite said, "NMPA's goal has always been to ensure publishers and songwriters receive the money they deserve. I am thrilled that through this agreement both independent and major publishers and songwriters will be able to get what is owed to them." The former chairman of the Department's Task Force on Intellectual Property at the Department of Justice has been pushing the deal with many digital media publishers to respect the rights holders.

"We must continue to push digital services to properly pay for the musical works that fuel their businesses and after much work together, we have found a way for Spotify to quickly get royalties to the right people. I look forward to all NMPA members being paid what they are owed, and I am excited about the creation of a better process moving forward," Israelite continued.

Spotify also expressed its commitment to pay out what the company owes to its rights holders. The Sweden-based company has also been working the NMPA to publish administration system to prevent the issues arise in the future.

"As we have said many times, we have always been committed to paying songwriters and publishers every penny," Jonathan Prince, head of communications at Spotify told The Verge. "We appreciate the hard work of everyone at the NMPA to secure this agreement and we look forward to further collaboration with them as we build a comprehensive publishing administration system."

The agreement gives benefit to both music publishers as well as Spotify. Song writers and publishers represented by NMPA can enjoy royalty as their sole rights, while Spotify can pay the music royalty properly.

Prior to the agreement, New York Times reported that over the last year, it emerged that Spotify had failed to properly obtain the mechanical licenses for large numbers of songs. Therefore the deal is a great help for the music streaming company that claimed itself to the music industry as law-abiding partner.

In an agreement, Spotify will pay out $21 million to publishers and songwriters. That include a $16 million for royalty payments and a $5 million bonus fund for publishers and songwriters. The deal covers all content between Spotify's inception and June 30, 2017

With the deal, Spotify has established itself to respect the right holders. Spotify has agreed with NMPA as the representative of music publishers and song writers to pay $21 million of unpaid royalties.

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