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Spotify and Pro Music Rights on music streaming
February 17, 2021

Spotify and Pro Music Rights on music streaming

For the past two years, there’s been a legal battle between Pro Music Rights, a US-based rights organization, and Spotify. There’s a lot of back and forth with interesting developments, statements, and even some wicked wording in the legal paperwork. You might want to grab some popcorn because this can be a show.

What’s Been Going On

This all started in May 2017. Sosa Entertainment is an independent label owned by Jake P. Noch who also owns Pro Music Rights collecting agency. Noch, as Sosa allegedly noticed that Spotify was removing the tracks he owned from their service. He stated Spotify removed those songs, “without advance notice [and] without ever telling [Sosa and PMR] why their songs were removed.” 

This led to a lawsuit from Sosa in November 2019 targeted at Spotify for selectively removing his music from their streaming platform without prior warning. The combined would amount to 550 million streams unpaid. In the lawsuit, they stated Spotify, “deliberately and maliciously blacklisted [Jake Noch] along with each and every single artist, composer, and writer associated with [the parties].” 

Even further, Pro Music Rights, again owned by Jack Noch, filed a massive lawsuit against pretty much every major streaming and music broadcast service in March 2020. They stated in their lawsuit a large list of companies from Apple, Amazon, Google, Youtube, and Spotify were, “running an illegal cartel for the performance rights of musical works” as if they came together in a group effort against Sosa and Pro Music Rights. The lawsuit continues to use the term “cartel” liberally. 

If true, this could be a devastating issue for the music industry. Sosa entertainment and Pro Music Rights oversees around 2 million songs and the loss of 550 streams and possibly more across all streaming platforms could break a label. If Spotify and other platforms were doing this with other record labels, they could create many issues with independent record labels and lead to favoritism.

The music industry has become more reliant on music streaming services, and metadata and royalties have become essential to watch and track. If streaming services are banning songs and labels, or manipulating metadata, it could be a massive issue.

This begs the question: Why would Spotify do this?

This is where the case becomes a bit weird. In May 2020, Spotify countersued with a statement, “Noch directed third parties to create millions of fake Spotify accounts, and deployed these fake accounts to artificially stream his and Sosa’s content up to hundreds of thousands of times daily, and upwards of hundreds of millions of times in total.” They continued with a claim that their fraud department was actively monitoring these accounts and saw “unmistakable signs” of Sosa’s content being “artificially inflated”.

If Sosa’s content was being artificially inflated, then Spotify might have been in the right to take down Sosa’s content. Metadata and streaming counts would lead to a payout to Sosa, and Spotify as a company wouldn’t want to payout if dummy accounts were being used. In our day and age, it’s not unheard of for dummy accounts to be used to push personal and political agendas.

Noch fired back against this countersuit with, “[Spotify’s] claims are laughable and blatantly false” and “These cases will show them that Spotify is just a house of cards and that a small breeze will cause the house to collapse.” Harsh.

Following all this legal drama, Pro Music Rights has announced and filed to the SEC they are going public with their Spotify-like streaming service. They will be raising capital by offering 910 million public shares as an investment. 

What Could Develop in music streaming?

In the latest development, on January 13, 2021, Sosa Entertainment and Spotify filed for a motion to stay to enter settlement talks together. This talk is scheduled to last 60 days to resolve the issue at hand, but it’s unknown what each side will be discussing or where it might head.

If Spotify was correct in their alleged removal of Sosa’s content due to artificial inflation, they might be turning to a settlement to end the lawsuit, and possibly pay Sosa a settlement amount. This could clear up the waters around Spotify and the possible metadata manipulation rumors and “shadow banning” of songs.

If Sosa Entertainment is correct that Spotify cut their content but lack the evidence, they might be moving towards a settlement for the payout. If they push to continue the lawsuit and are found to be in the right, it could be a landmark case that forces streaming platforms to be more responsible for metadata, streaming counts, and accountability. However, after two years of this battle and now the settlement, the outlook of a decided case becoming legal is poor.

Reprtoir’s Royalties Manager

If I can leave you with one thought: managing a music business administration is complex. So much that even the biggest among us sometimes can’t agree on something. And it shouldn’t worry you in your day to day life: it should be clear and easily manageable. Kind of like in an all-in-one workspace!

We built a Royalty Accounting system to add it to Reprtoir’s Software suite. Manage catalogs, contracts and royalty accounting all in one workspace, every element link to the other and keep a clear chain of rights. Book your free demo with the team to see if we fit your needs!

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