We’ve all heard talk about how Spotify has decided that it won’t pay record royalties on certain tracks. Today’s category for non-payment is anyone who streams under 1,000–but realize that if they get away with this, tomorrow’s category could be something else. And of course it must be said that if they get away with this, tomorrow’s category could easily be the songs on the streams they unilaterally decided to stop paying.

And “unilaterally” is the buried lede in the story. If Spotify has a license for its exploitation of sound recordings, I would imagine that license has some pretty explicit terms about what they have to pay and how they have to pay it.

If you have a direct agreement with Spotify or if you have a distributor that has a direct agreement with Spotify, this would be a good time to confirm whether that contract permits Spotify to unilaterally decide not to pay you for a certain category of streams. My bet is that it says nothing of the kind aside from the minimum stream time provision.

What I would expect to see is a definition of a royalty-bearing play that looks something like this:

“any stream or playback of a cached download of an item of audio or audio-visual content by means of Spotify with a minimum  duration  of thirty (30) seconds.”

If that’s all that’s in the agreement, then Spotify’s implementation of a stream discrimination policy and failure to pay under the agreement would be a breach.

If that language or similar terms are not in the agreement, or if a particular agreement includes language that would allow Spotify to unilaterally alter the terms on which they pay royalties, artists or distributed labels would be entirely reasonable to demand to see the terms. 

If the terms are in a distribution agreement between a distributor and Spotify to which the artist is not a party, the artist affected by the stream discrimination policy should determine if the distributor has a continued obligation to pay them regardless of whether the distributor is paid by Spotify. This type of provision may not be that obvious, but that artist may not know how it would be applied to them.

Either way, it may not be wise to just assume that Spotify has the unilateral right to impose stream discrimination terms on anyone. Or that you must suffer for the bad deal your distributor made.

This may also be a good time to find out exactly what are the relevant financial terms of your distributor’s agreement with Spotify. You may also wish to confirm your audit rights because the idea that Spotify’s stream discrimination policy will be implemented flawlessly is a not very funny joke, particularly if you have to rely on Spotify giving a straight count to your distributor and your distributor giving a straight count to you.

This is not to attribute malicious intent to anyone in the chain–the problem can be explained by incompetence much more easily. Seriously, it’s a lot to ask.

On the other hand, it’s good to remember that this whole episode is somehow excused by overcoming streaming fraud. I think there are a lot more direct ways to stop fraud than stiffing an entire category of artists.