INTRODUCTION
Music is a vivid expression of ideas, thoughts and emotions through a sound that combines rhythm, melody, and harmony. It includes vocals and instruments that are soothing to the ear and create an atmosphere of pleasure and joy. For some, it is a source of income. Musical artists earn their bread and butter by recording their musical works and selling them off in the market often with the help of giant recording labels and corporations. They also earn money when their works are played on radio, television and other electronic mediums. However, artists earn most of their money on tours, i.e., through live performances of their renowned works.
With the advancement in science and technology along with the increase in availability and accessibility of the Internet, the physical sales of music albums have been reduced tremendously and replaced by online streaming on popular platforms like YouTube, Spotify, Apple, Pandora, Tidal, Deezer, etc. The main reasons for the growing popularity of music streaming are affordability and convenience. A vast gallery of music is available to the users a click away. The on-demand streaming regime suits the current busy and dynamic lifestyle of youngsters. They love to hear music while doing their day-to-day activities like going to school, college or the workplace, cleaning home, buying groceries or going to the gym.
Spotify maintains its reign as the top music streaming app on the planet. However, Spotifty’s success is not an overnight effort; it is a culmination of numerous ups and downs and wide-scale branding and marketing strategies to build a unique brand identity and a loyal consumer base. Spotify uses innovative means to personalise music based on one’s mood and musical taste. The consumer-oriented approach of Spotify led to its steady rise over the years with its humble starting as a Swedish audio streaming venture in 2006[1]. Today, it provides a unique consumer experience to its 615 million active global users with its fresh and bold designs and diverse content which includes loads of music, podcasts, videos, and community-driven playlists.[2]
HOW IPR WORKS IN THE MUSIC INDUSTRY?
Intellectual Property protects the creations of human minds and grants exclusive access, use and distribution rights through assignment and licensing to the creators. It provides the proprietors of the creative works the necessary impetus to continue investing their time, money and efforts in the creative and innovative processes. It is an efficient mechanism that allows them to bear the fruits of the meticulousness and determination to create new products and processes that provide economic benefit and signify a major technical advance to the existing state of affairs.[3] Musical artists in India have copyright over their creations for their lifetime plus sixty years following the beginning of the calendar year after their death.[4]
The music industry can be broken down into three main facets: music publication, recording and live concerts and performances by the artists. Live events and tours are the main sources of income for musical artists but it is through the publishing of the recording that the singers, producers, composers and lyricists gain public outreach. A master recording is the original recording of a copyrighted audio performance over which a publisher exercises sole rights of use, sale, and transfer. Deprived of a Master Use Licence and Synchronisation Licence, no individual can use a copyrighted song for a new film or commercial video.[5]
A publishing company ensures that a creator is provided fair financial compensation for their creation. Performing Rights Societies protect the copyright of the authors and collect royalties on their behalf for public performances of their music. Whenever a piece of music is played on radio, television or a cover is performed on any social media platform, the author receives some monetary benefits. A synchronisation licence is needed when you wish to synchronise or pair a copyrighted musical piece with a visual performance in a commercial film, advertisement, online video, etc. Mechanical rights allow an artist to reproduce their works onto CDs, DVDs and recording tapes for sale and distribution. [6]
Music streaming operators like Spotify and Tidal work on a micro-payment model wherein a subscriber has access to a vast music library on payment of a monthly or annual fee for personal consumption for a particular duration but they don’t enjoy the rights to download or permanently keep any audio performance which represents the main difference between streaming and digital download. Through streaming, a small fraction of money is paid to the author of the work through royalties. Royalty rates depend upon several factors the residence country of the subscriber, total subscribers of the streaming platform and the contract between the streaming company and music publisher that fixes the rate of royalty payment per stream.[7]
SPOTIFY’S MUSIC STREAMING POLICY
Spotify has a robust Intellectual Property Rights Policy in the form of Spotify Services that deals with copyright and trademark infringement claims with proper care and caution. Spotify supports an efficient mechanism for reporting content that unfairly infringes upon copyrighted musical works for removal of the content or its disablement in a specific location. For repeated offenders, Spotify reserves the right to terminate their accounts permanently. If a user believes that their content has been unfairly removed or disabled, they are given a reasonable opportunity to appeal against the decision of Spotify.[8]
Whenever a Premium subscriber or ad-supported subscriber plays a song, royalties are paid to the rightsholders based on their stream share. Spotify follows a distinct process for calculating the fees to be paid to the artists. The revenue generated from the Premium subscription and ads are distributed to the rightsholders after cutting necessary expenses like billing, processing costs, sales operations and taxes. Royalties are paid to the rightsholders every month and they distribute the money to the singers and songwriters as the case may be based on their profit-sharing contracts over which Spotify has no authority whatsoever.[9]
CONUNDRUM OF ARTIFICIAL STREAMING
Artificial streaming involves stream manipulation through third-party services by using bots that automatically stream your music on Spotify to improve your streams and revenue share. Investing in such malpractices is a major red flag as it reduces the credibility of Spotify by reducing the streaming share of artists with legitimate listeners. Instead, Spotify urges artists to use their budget to develop content like music videos, live performances and ads that tempt the public and help them build a loyal fanbase that would stream their music and attend their concerts. Using bots to improve streams is against the terms and conditions of Spotify and can have adverse repercussions.[10]
Spotify boasts a mammoth team of researchers and engineers who work ardently to detect, disable or remove artificial streams to protect their royalty share of artists with legitimate streams. A legitimate stream is one wherein an actual human listens to a song track instead of a bot that is programmed to perform automated tasks. Spotify urges artists not to fall for the tricks of any third party that promises to boost their streams or guarantee placement on any Spotify playlist as they use bots and such marketing tactics offer no benefits like increased brand recognition unlike what they suggest in their portfolios in the long run. When Spotify detects fishy streaming activities, it reserves the right to withhold royalties and correct streams and chart positions. In some circumstances, Spotify may also remove your music from their platform.[11]
MAKING STREAMING ARTIST-FRIENDLY
Spotify has revamped its Royalty Policy to make streaming more artist-friendly. It is a major transformative step that was first introduced in November 2023. It aims to cultivate an atmosphere of transparency and accountability in the music-streaming ecosystem by improving the revenue share of the artists. From 2024, a track to be eligible for monetization must record at least 1,000 streams in 12 months. This change improves the payouts to eligible artists roughly by a margin of 0.5 per cent.[12]
The new policy benefits Spotify in no way as it does not affect how royalty fees are calculated in any way. Royalties are based on the streamshare. For example, if a song track records 0.4 per cent of total streams, then the rightsholders shall be paid 0.4 per cent out of the total revenue pool of Spotify for that month. This policy aims to curb the menace of artificial streaming and allows artists who have more material amounts of streams to receive better financial compensation.[13]
CONCLUSION
Music is an art form that has been taken as a profession by some individuals who have skills and talents good enough to monetise them. These days, musical products are commonly listened to on-demand on various music streaming platforms. Spotify is one such online music provider. It has over the years emerged as the market leader. It pays royalties to the music distributors for the total streams after deducting necessary expenses. The music distributors then share the money with the artists, composers, songwriters and other stakeholders.
Spotify follows a “pay-for-play model” and compensates right-holders which later pay artists and producers based on their agreements. Spotify has been criticised for refusing to strike deals with independent artists and unfairly paying them. Many artists, notably Taylor Swift and Thom Yorke, entered into a public tussle with the music streaming giant by temporarily removing their music from the platform.[14] In 2024, Spotify aims to make several changes in its royalty regime to make streaming more artist-friendly by curbing the menace of artificial streaming and ensuring that artists are paid well for their work.
Author(s) Name: Paridhi Sehgal (Amity University, Noida)
Reference(s):
[1] Chayanika Goswami and Manisha Mishra, StartupTalky, Spotify Success Story: How it Brings Music for Everyone? <Spotify Success Story – The Most Loved Music Platform! (startuptalky.com)> accessed 21 May 2024
[2] Spotify, For the Record, Q1 2024 Results <Spotify Reports First Quarter 2024 Earnings — Spotify>accessed 21 May 2024
[3] WIPO, What is Intellectual Property (2020).
[4] Section 22 of Copyright Act 1957
[5] Alexandra Tasev, Intellectual Property in the Digital Streaming Age: How Music Becomes a Lawsuit (December 9, 2020) Pg 4-6 <Intellectual Property in the Digital Streaming Age: How Music Becomes a Lawsuit (pace.edu)> accessed 21 May 2024
[6] Ibid.
[7] Barb Gonzalez, Lifewire, Difference between Streaming and Downloading Media (March 25 2022) <The Difference Between Streaming and Downloading Media (lifewire.com)> accessed 21 May 2024
[8] Spotify, Spotify Intellectual Property Policy <Intellectual Property Policy – Spotify> accessed 21 May 2024
[9] Spotify for Artists, Royalties <Royalties – Spotify> accessed 21 May 2024
[10] Spotify for Artists, Artificial streaming and paid 3rd-party services that guarantee streams<Artificial streaming and paid 3rd-party services that guarantee streams – Spotify> accessed 21 May 2024
[11] Ibid.
[12] Spotify for Artists, Track Monetization Eligibility (2024) < Track monetization eligibility – Spotify> accessed 21 May 2024
[13] Ibid.
[14] Hannah Ellis-Petersen, The Guardian, Taylor Swift takes a stand over Spotify music royalties <Taylor Swift takes a stand over Spotify music royalties | Taylor Swift | The Guardian> accessed 21 May 2024
