Spotify Would Prefer to Avoid Dealing With Fair-Pay Rules and Instead Choose to Quit Territories Outright

Spotify and Uruguay: The Clash Over Fair-Pay Laws

Spotify and Music Streaming in Uruguay

Spotify is one of the biggest music streaming apps on Android, and it consequently accounts for a lion’s share of earnings for artists through music streaming. However, the local government in Uruguay voted a budgetary bill into existence in October, prompting Spotify to shut shop in the country. This decision has caused a stir in the music industry, and it involves the implementation of copyright law and fair-pay laws.

Artists’ Earnings and Copyright Law in Uruguay

The payment of royalties from streaming is usually governed by copyright law, and that’s also the case in Uruguay, reportedly the world’s 53rd largest market for music. The distribution of music royalties is typically paid to publishers, record labels, and composers, with the label then responsible for giving every musician and artist their designated share. However, Uruguay has unconventional royalty laws that don’t compensate musicians unless they are also composers or lyricists. The same principle extends to screenwriters and directors in the audiovisual media industry.

Amendments to the Copyright Law

Uruguay created Articles 284 and 285 as budget bills, amending the copyright law to ensure that “authors, composers, performers, directors, and screenwriters” receive fair and equitable remuneration. Spotify, in response to this, released a statement  explaining how it already pays labels and composers in the country around 70% of the earnings from streaming on the platform. It went on to explain its interpretation that the new law mandating equitable remuneration would be akin to paying twice for the same music, making business in Uruguay unviable.

Spotify’s Decision and the Future of Music Streaming in Uruguay

Spotify will stop accepting new Premium subscription requests in the country on December 28, with all current billing stopping by the end of December, shifting everyone to free-tier accounts. In January, Spotify will exit Uruguay, and come February, the service will shut down altogether. The three-paragraph amendments may hurt the same underpaid musicians they hope to benefit, as the licensing system could potentially kill Creative Commons licensing and make media usage disproportionately hard, even for one-off instances.

Spotify’s decision to exit Uruguay due to fair-pay laws may have a significant impact on the country’s music industry and its potential earnings for the foreseeable future. The clash between Spotify and Uruguay highlights the complexities and challenges of implementing fair-pay laws in the digital era and the music industry.

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