Earlier today, Apple turned back against Spotify's EU antitrust complaints in a press release, and said Spotify "wants all the benefits of a free app without being free." The statement contains the expected recalls of Spotify's claim on how Apple uses the App Store to boost Apple Music, but there's something interesting at the bottom: a jab against Spotify that is completely independent of the EU fight.
"Only this week, the Apple release says," Spotify sued music creators after a decision by the US Copyright Royalty Board (CRB) demanded Spotify to increase its royalty payments. "This line is obviously meant to throw Spotify as a poorly-assembled actor, and Apple as a friend of artists who should be defended. It's not a bad tactic, since artists and Spotify have long had a tested relationship. But the truth is, of course, a little more complicated than that.
"When the Modernization Act became law, it was hoped that it would signal a new day with improved relationships between digital music services and songwriters, the Israelite said in a statement. "That hope was shattered today when Spotify and Amazon decided to sue songwriters in a shameful attempt to cut their payments by almost a third."
But as The Verge has pointed out that none of these companies are actually suing songwriters, and it is not entirely clear that they are actually trying to reduce general prices. Instead, they move on to the next step in a rate-setting process that has already been going on for three years.
US Copyright Royalty Board, or CRB, is a panel of three administrative judges appointed by the Library of Congress. Each year, the CRB is mandated by US law to meet and assess rates for mechanical royalties, which is a payment made to songwriters and publishers when a copy of the song is purchased or streamed. This includes individual copies, such as vinyl or digital downloads, but also "ephemeral copies" – the temporary copies of songs interactive streaming services such as Spotify create what enables streaming streaming services at work.
Which companies like Spotify and Amazon are appealing, is the CRB's latest decision on mechanical royalties. This decision gradually increases interest rates from current 10.5 percent to 15.1 percent over a five-year period from 2018 to 2022, making it the largest interest rate increase given in the CRB history. The decision was formally published a couple of weeks ago, and started the clock on a 30-day window that appeals can be made.
Spotify, Pandora, Google and Amazon were first filed for a CRB rehearing in 2018 (a request for referees to review the decision again), mostly asking for clarification on multiple terms, the companies felt ambiguous (for example, the difference between "Limited Offerings" and "Limited Downloads"). In response, the judges said it was no case to give a rehearing, but agreed to address some of the issues raised, which were then published in an order.
It is similar to Spotify, Pandora, Google, and Amazon are not completely satisfied with the compromises described in this document, and they made use of the 30-day appeal window to get different judges to look at the requests they make.
In a blog post, Spotify says it supports the course increase, but searches for the parameters for which specific content falls below this frequency to be better defined.
"We support US effective rates that increase to 15% between now and 2022, provided they cover the proper scope of publishing rights," the mail reads. "However, CRB's 15% rate does not take into account all these rights. For example, it does not take into account the price of videos and texts." Spotify claims that everyone is on the same page for more money for songwriters, but that CRB The process resulted in something too wide. "We are willing to support an increase in songwriting fees," says Spotify, "assuming the license covers the proper scope of publishing rights." For its part, NMPA Spotify is still ultimately about lower prices, since things like text and music videos have nothing to do with the CRB rate setting process. It's a fight.
But there is still not "Spotify sue songwriters." Suing requires a legal proceeding against someone or something, and CRB's review and resulting decision was not initiated by anyone. It is a administrative court with judges legally allowed to meet and assess these prices every few years. Now that it has a decision and the movement for rehearing was denied, Spotify and these other streaming services are appealing in the Court of Appeals, which is the only available next step in the process.
It is likely that this action – move the process from CRB to the Court of Appeals – which led NMPA to use the word "sue", but all that really happens is the judges changing and these streaming services request a new one look at the adjustments they requested in CRB's decision. As entertainment lawyer Jeff Becker of Swanson, Martin & Bell told The Verge last week that it was waiting for a while for these platforms to take the opportunity to preserve the bottom line through an appeal – that is the obvious next
It's important that Apple Music is covered by any decision and pricing set at the end of this process – so while Apple can sit back and take pictures on Spotify for the complaint, it will Take advantage of any decision that favors Spotify, Amazon and Google – which is not a bad position to be in.
So why does Apple take this up? Probably because Spotify actually sued Apple this week. An anti-trust complaint was filed with EU regulators, claiming that the 30 percent cut Apple takes from subscriptions made through the App Store is unfair and detrimental to consumers.
While the two dukes out there, Apple has an easy opportunity to back up Spotify's decision to appeal CRB, where emotions are already high. It has nothing to do with Spotify's lawsuit against Apple, but it is a reminder that while Apple is running a platform Spotify does not trust, Spotify is running a platform, millions of artists do not trust either.