Spotify has reached a deal with the National Music Publisher's Association (NMPA) that resolves a dispute over unpaid royalties.
The agreement will allow music publishers to get royalties for songs on Spotify (in the US) where the ownership information was previously "unknown."
The deal includes roughly $16 million in unpaid royalties, plus a $5 million "bonus" split between those who opt-in to the program, according to a person familiar with the matter. The total is about $21 million.
The agreement comes after Spotify has been hit with multiple class-action lawsuits regarding unpaid royalties. Those suits seek damages totaling in the hundreds of millions of dollars, but this deal could undercut them. The NMPA is the major trade association for American music publishers and songwriters.
“As we have said many times, we have always been committed to paying songwriters and publishers every penny," Spotify Global Head of Communications and Public Policy Jonathan Prince said."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 deal covers usage of songs on Spotify from its start in the US until June 30, 2017.
Publishers who opt-in to the agreement (during a period starting in early April and lasting 90 days) will be paid by Spotify in three ways:
- They will get a piece of the $5 million "bonus" fund.
- They will be able to use an online claiming portal to get paid royalties for "pending" or "unmatched" songs.
- They will get a portion of royalties for songs that remain unclaimed, depending on how much their songs were played on Spotify.
According to the NMPA, the agreement will also ensure that Spotify will continue to work to make the process of identifying rightsholders work more "accurately" and "efficiently." The NMPA also says the deal will provide "a path to direct licensing between Spotify and publishers, with the goal of strengthening business relationships."