The National Music Publishers’ Association’s (NMPA) war with Spotify continued at its annual meeting held Wednesday (June 12) at Lincoln Center’s Alice Tully Hall.
In an address to the publishing executives in attendance, NMPA CEO/president David Israelite announced that the organization has filed an official complaint with the Federal Trade Commission (FTC) and sent letters to the attorneys general for nine states as well as consumer trade groups to try to stop Spotify from reclassifying its premium tiers as “bundles” — a classification that allows the streamer to pay a lower mechanical royalty rate in the United States.
The NMPA alleges that Spotify has violated the Restore Online Shoppers’ Confidence Act (“ROSCA”), section 5 of the FTC Act and various consumer protection laws.
As Billboard previously reported, publishers anticipate a $150 million loss in U.S. mechanicals in the first year of the bundling reclassification compared to what publishers would have been paid had it never happened. The decreased payments began in March with no prior warning, according to the NMPA and the Mechanical Licensing Collective (the MLC). Spotify, however, believes it is playing by the book in making the change to how it pays out U.S. mechanical royalties given that it has “bundled” audiobooks in with the other offerings included in the streamer’s premium plans.
“Spotify has declared war on songwriters,” said Israelite at Wednesday’s meeting. “Our response shall be all-encompassing.” Israelite noted that the NMPA (as well as the MLC) has taken multiple actions to stop Spotify’s bundling reclassification already. The organization’s all-out retaliation began with statements made against the company in March, followed in May by a cease and desist letter in which the NMPA threatened to file a lawsuit against Spotify for allegedly using music and lyrics in some of its podcasts and videos without permission. (Spotify called the move a “press stunt” by the NMPA).
“Our letter was not just a warning shot, and the NMPA has never lost a lawsuit. So you’ll want to stay tuned,” Israelite added on Wednesday.
Only days after the NMPA threatened legal action, the MLC filed a lawsuit against Spotify for “improperly” reclassifying its premium tiers as bundles.
The following week, the NMPA sent a letter to the Judiciary Committees in both the U.S. House and Senate asking for an overhaul of the statutory license in section 115 of the Copyright Act, which binds publishers to strict regulations and rules over what they can charge streaming services for U.S. mechanicals.
In the NMPA’s letter to the FTC, obtained by Billboard, general counsel Danielle Aguirre wrote: “The [NMPA] writes to urge the FTC to address unlawful conduct by Spotify that is harming millions of consumers and the music marketplace… Spotify has deceived consumers by converting millions of its subscribers without their consent from music-only subscriptions into ‘bundled’ audiobook-and-music subscriptions, publicly announcing increased prices for those subscriptions, failing to offer an option for subscribers to revert to a music-only subscription, and thwarting attempts to cancel through dark patterns and confusing website interfaces. This bait-and-switch subscription scheme is “saddling shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase.”
Aguirre continued, “Indeed, it has all the red flags of problematic negative-option practices that the FTC has consistently warned companies about: (1) Spotify has failed to give consumers all material information about its subscription plans up front; (2) Spotify has billed consumers without their informed consent; and (3) Spotify has made it hard for consumers to cancel.”
Other letters of complaint were also sent to the attorneys general for nine states, including California, New York, Tennessee, Colorado, Georgia, Connecticut, Illinois, North Carolina, Oregon and Washington, D.C. In the NMPA’s letter to both the New York bureau chief of the consumer frauds and protection bureau as well as the state’s assistant attorney general, obtained by Billboard, Aguirre wrote: “We urge your office to investigate and address Spotify’s conduct as well.”
Letters were also sent to consumer groups including the National Consumers’ League, the Consumer Federation of America, Public Citizen Consumer Action and the National Consumer Wealth Center in hopes of sparking a class action lawsuit.
The NMPA’s recent moves are being supported by representatives Ted Lieu (D-CA), Adam B. Schiff (D-CA) and Marsha Blackburn (R-TN) via a letter sent Wednesday to Shira Perlmutter, register of copyrights and director of the U.S. Copyright Office.
In the letter, the three representatives wrote: “As members of the Judiciary Committee, which originated the Music Modernization Act, we want to see the law faithfully implemented and copyright owners protected from harm arising from bad faith exploitation of the compulsory system. Digital service providers should not be permitted to manipulate statutory rates to slash royalties, deeply undercutting copyright protections for songwriters and publishers. A fair system should prevent any big tech company from setting their own price for someone else’s intellectual property, whether the owner wants to sell or not.”
Each year, the NMPA is known for announcing major breaking news at its annual meeting — typically against tech companies that, in its view, are not properly paying for songs. Last year, Israelite announced a $250 million lawsuit against Twitter, which is still in progress. In previous years, the NMPA has gone after Twitch, Peloton, Roblox and more.
“We will see what the Federal Court in the Southern District of NY, the United States Congress, the Copyright Office, the Copyright Royalty Board, the FTC, multiple State Attorneys General and consumer advocacy groups have to say,” Israelite told the crowd on Wednesday. “Most importantly, we will see what the songwriters and music publishers who make the product that allows Spotify to exist have to say.”
