Taylor Swift's Departure From SPOTIFY® Illustrates The Difficult Decisions Copyright Holders Face When Deciding How Best To Monetize Their Work.

Taylor Swift’s record label, Big Machine Label Group, caused a minor uproar in the music industry this week when it decided to remove all of Swift’s music from the streaming service Spotify®.  The move (which comes fresh on the heels of Big Machine’s release of Swift’s latest album, 1989, which has already sold more than 900,000 copies and is projected to sell more than 1 million by the week’s end) illustrates the growing difficulty copyright holders face when deciding how to monetize their work.

In Swift’s case, Big Machine faced a decision that has become epidemic in the music industry: will it be more lucrative to sell albums or to receive royalties from streaming services (or to utilize some combination of the two)?  Albums typically sell for somewhere in the $10.00 range.  In contrast, Spotify® pays royalties of less than one cent ($0.01) for each time a song is played.  Yet, for an artist like Swift, whose music is reportedly streamed by over 20 million Spotify® users, even very low royalty rates can yield million-dollar returns.  Furthermore, paying royalties on a per-play basis means that record labels and artists can continue to derive income from a song long after it is released.  Yet, labels and artists must consider how many users might purchase an album upon release if they know the album will not be available on streaming services.  Therein lies the dilemma.

Other industries face similar problems.  For years the publishing industry has been trying to strike the right balance between traditional print media and electronic content.  And just earlier this year the United States Supreme Court was called upon to decide whether the Aereo® streaming service was violating the copyright on numerous television programs.  As methods of delivering content over the Internet continue to evolve, businesses that rely on copyrighted works to generate revenue will increasingly and repeatedly have to determine which means of distribution provide the greatest benefit.

Of course, if a business provides goods or services that are as in-demand as Swift’s music, it is likely to generate enviable revenue no matter what means of distribution it chooses to employ.

Article written by Mr. Michael Keenan, associate at Hinman, Howard & Kattell, LLP.  Please contact Mr. Keenan directly at 607-231-6927 or mkeenan@hhk.comm for additional information.

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