Spotify Licensing Essay

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The musicians, owners of Internet platforms, and other shareholders all need to gain from the expansion of the music business. As a result, it has become necessary for the owners of the music, the artists, to enforce some copyright rules to prevent unauthorized distribution or reproduction of their work. Additionally, licenses are needed by the owners of Internet platforms, protecting musicians' work from being shared without their consent. To account for the shifting conditions between the artists and the distributors, the licensing systems and intellectual property law have undergone substantial changes. There are two types of musicians in the music industry that include performing artists and songwriters. The songwriters always have authority over the song's lyrics and melody. As such, the Internet platform owners have to acquire licenses from the songwriters before they distribute the pieces of music. On the other hand, the performing artist holds the authority over the recording of the song. The performing artist and the songwriter both agree to assign their work to a third party rather than choosing to seek payment on their own.

In this case, the Internet radio broadcasters hold the most significant share of music marketing on the Internet. As such, Spotify and Pandora fall under the category of providing Internet broadcasting services. The two platforms have to pay royalties and acquire licenses for them to use the music belonging to other artists in the service provision process. Spotify is an interactive service and thereby has to acquire permits for reproduction, and distribution of music. There are some issues which make it difficult for the companies to obtain the licenses. Some of these include financial instability and unusually high royalty rates.

This study aims at analyzing the problems to the issues discussed in earlier papers. Spotify has been facing several cases and lawsuits over their licensing rights especially when it comes to mechanical rights. As such, the courts and the media companies have resolved to find solutions to the problems rather than just make judgments for the artists to be compensated yet the cases keep increasing in the law courts.

Problem Statement

In the previous sections, the studies have explored the legal issues that face Spotify. Spotify was likened to a mall built on an earthquake fault line due to the method in which it came to the market. The Company was put up quite fast and carelessly which led to its inefficiency in the market. As such, it has faced quite a lot of lawsuits regarding copyrights licenses and in some cases it has had to compensate artists for the losses caused. Most of its operations were built upon traditional copyright licenses. It mainly deals with the internet and music streaming which means that the evolving technology has greatly influenced its operations yet the copyright policies remain unchanged. As a result, it becomes quite difficult for the company to reproduce music and distribute it based on the traditional copyright policies. As it stands, the whole music industry is found upon a physical sales model rather than streaming.

The previous paper looked into a case which involved Franklin Valli being represented by his lawyer, Gaudio, in suing Spotify for overstepping the copyright license through streaming music compositions for which it had not acquired mechanical licenses. In response to the allegations filed by Gaudio, Spotify also filed a motion where they argued that the platform has no obligation whatsoever to pay mechanical royalties. The claimed that music streaming is more of performance such as that conducted by radio broadcasts rather than a distribution of copies such as that which involves direct digital sales. In such a case, Spotify would only require performance rights acquired from collecting societies instead of mechanical rights from publishers.


Spotify says that in the past, the current model upon which the music industry is built was quite appropriate for the physical sales. There never used to be any trouble for a particular song to be owned by different publishers in different countries. The radio broadcasters in such a case paid the publishers and record labels in the same country for the licenses of distribution and reproduction. With the evolving technology, Companies like Spotify were founded where they deal with online-based sales. As such, it becomes quite a huge problem for the music industry to continue using the old models even with the new companies. With a song being represented in different countries by different publishers and record labels, it becomes quite confusing and disadvantageous for the companies like Spotify since they are not sure which publisher and record label they should pay in which country.

One of the solutions that the media Companies including Spotify have agreed upon with the licensing agencies and the law courts is that which involves a database being built which will see to it that proper measures and processes are followed to ensure efficient payment of mechanical royalties. In relation to the law suit that had been filed by Gaudio on behalf of Franklin Valli against Spotify, the database will help both the streaming company, the artists and the record labels.

The agreement dictates that the database should be able to retain complete and accurate information about all the recorded music. The data on the music should be sent to the administrator of the database by the record labels and the publishers. The database will then employ the use of automated technology of music recognition to define the compositions included in the recordings and music scripts.

The technology applied will be quite efficient for both the license givers and the license holders despite the fact that it is not yet perfected. This means that the administrator of the website will have to run the website in order to ensure smooth running of services in the database. The website administrator’s roles will be to ensure that the license holders, in this case Spotify, are able to report and send the related information of the music tracks that the technology cannot identify and also the administrator acquires the information of the track publishing and recording from the record labels and publishers.

The database will also be required to give mechanical licenses to the license holders like Spotify in the music industry through a specified standard format of DDEX. This method of interrelation among all parties involved in the music industry ensures that there is unity and a sense of responsibility for all the parties involved to ensure that the database is running smoothly. This solution is quite efficient since it does more than just solve the lawsuits and compensations part of the streaming licenses in the music industry.

This agreement has taken root mostly in the American states as well as in the Canadian region where the database is already running. The biggest advantage with this model of operation in the music industry is that it is ensuring that the music publishing industries are beginning to admit the problem in the license issuing process as well as the royalty collection process. As such, the music industry. The publishing industries have realized that papering the royalty collection and license issuing process will only create more trouble and increase lawsuit expenses rather than bring about any tangible progress.

Spotify as an online music streaming company has had to focus on a solution-based approach to ensuring efficient service provision to its clients and on the other hand balancing the profits and expenses of acquiring licenses. Spotify has commented saying, "Today we are excited to announce that Spotify will invest in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem.This means that Spotify is looking to ensure that the lawsuits it has had to attend are reduced and also its service provision measures are improved. The measures will ensure that both the clients and the artists will benefit through the streaming platform.

The lawsuit settlement aims at ensuring that Spotify as well as other music streaming companies are held responsible for the tracking down the composition rights holders and ensuring that they pay them their respective royalties. This settlement will benefit Spotify in a way that the company will avoid future lawsuits based on copyright licenses and also will increase the chances of upcoming and new artists being recognized and accorded fair compensations when their music is streamed online.


Internet radio broadcasters have made significant progress in enabling distribution of music. The radio broadcasters allow users of the platform to listen to music for free which ensures that these users develop an interest to want to discover and try out new music. In turn, the users go ahead and subscribe to the services. Spotify is an example of an Internet radio broadcasting company.

For Spotify to provide the services they provide to the users; they have to acquire licenses related to music reproduction and distribution. The process of obtaining permits and royalty rates have been quite challenging to Spotify. The licenses have become expensive and have also increased in number, which means that the company faces economic strains since most of the profit acquired by the company is used to cover the costs. As such, the company also fails to market the artist’s music efficiently and as a result, the rates of payment are too low. The artists have then filed complaints of the company being inefficient in the distribution of the music to the users.

To solve this problem, Spotify as well as other music streaming companies have come up with solutions which will ensure that there is efficient service provision to the clients and fair compensation to the artists. The courts have also played a great role in supporting this move to establish solutions to the root problems in the streaming platform rather than just authorize compensations over and over again.

Therefore, the publishers and record labels, the music streaming companies, and the courts have agreed upon settlement which have ensured building of an online database that will ensure issuing of licenses as well as collect the necessary information from both the publishers and the music streaming companies. This database is efficient though not perfect acting as a mediator between the two parties. With time, the technology will be perfected thereby bringing harmony in the music industry.


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July 07, 2023
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