In Its Battle with Songwriters, Spotify Is Handing Business to Apple

Spotify has been at war with Apple on several fronts lately, but it now appears that it’s actually losing the most ground to Apple as a result of an entirely different battle — its dispute with U.S. Copyright Royalty Board over an increase in the royalties that would be paid to songwriters.

Last year, the U.S. Copyright Royalty Board made a decision that the rate of royalties paid to songwriters would be increased by 44 percent over the next five years. Following that decision, Spotify — and almost every other major streaming service except Apple — made the unprecedented move to appeal that decision, based on the impact that it would have on their bottom line.

Unsurprisingly, the dispute has turned into a PR nightmare for Spotify, especially with Apple sitting out the dispute entirely, a move that seems wisely prescient in retrospect as Apple gets to position itself as a champion of the rights of songwriters and other creators without having to do anything other than avoid the perceived attack on them.

We reported last month that songwriter organizations had already begun to heap praise on Apple, calling it a “friend to songwriters” while condemning the “unified front” of the competing services — Spotify, Amazon, Google, and SiriusXM/Pandora — which music association executives have said is tantamount to “bullying” and “declaring war” on the songwriting community.

The streaming companies who are challenging the CRB ruling have been trying to spin the dispute as being with the CRB’s complex rules, but many feel that this is simply a rather transparent attempt to disguise their real objective of seeking a lower rate, and while the companies have tried to explain the details of what they’re fighting against, they’ve failed to actually explain why this could be good for the songwriters themselves in any way.

According to the latest report from Variety, Spotify is losing the most in the midst of this dispute, as many songwriters have now reached the point where they feel that the streaming service no longer cares about them, or even about music in general. Spotify has been spending much of its resources over the past year or so in trying to build up its podcasting business, acquiring several audio production companies toward that end. Further, when Spotify’s chief content officer, Dawn Ostroff, spoke at South by Southwest last month, she stated that its as Spotify’s mandate to become “the world’s number one audio platform” (emphasis ours).

Meanwhile, according to Variety, many songwriters are now very publicly speaking out against Spotify and canceling their subscriptions, to the point where #CancelSpotify stands to become a trending hashtag on Twitter, while making it clear that their money will now be going to Apple instead.

Spotify has continued to try to reach out to artists and songwriters in order to explain its stance on the CRB appeal, but after word of a series of town hall gatherings in Nashville and Los Angeles leaked out and the National Music Publishers Association urged writers not to attend without a songwriter organization representative present, the meetings never actually got off the ground, and Spotify has been unable to shake the perception that it is against songwriters. In a guest post for Variety, National Music Publishers Association president David Israelite outlines the longstanding detente that has existed between content creators such as songwriters and the “big tech” streaming companies, which they have long felt don’t generally have their best interests at heart.

It is remarkable that anyone could stand up to the likes of Google, Amazon, Spotify and the other tech titans who amass more power every day. However, it proves that while these companies may harness data, music continues to strike a nerve that cannot be ignored. People don’t just care about the music that moves them, consumers also care about the people who create it, and everyone from governments to Gen Z are no longer buying the notion that tech companies must operate unchecked at the expense of musicians.

David Israelite, President and CEO, National Music Publishers Association

Israelite adds that the social media revolution has allowed songwriters to have a voice and gain the upper hand, but that its still a struggle against companies like Spotify, which he feels has become duplicitous, launching a flashy “Secret Geniuses” PR campaign last year to “promote the idea that it valued what songwriters created” while at the same time launching a lawsuit in the courtrooms of Washington D.C. that “could set songwriters back decades.”

Meanwhile, as Spotify shoots itself in the foot, Apple is reaping the benefits, surpassing Spotify in U.S. subscribers earlier this year, and reports that the growth of Apple Music is outpacing Spotify globally as well.