Royalty Disputes in Music Streaming: Evaluating How Artists and Labels Navigate Copyright and Revenue Sharing

The rise of music streaming platforms such as Spotify, Apple Music, JioSaavn, and Gaana has transformed the music industry, but it has also led to increasing disputes over royalty payments, revenue sharing, and copyright ownership. Artists and composers often struggle for fair compensation, while record labels and streaming services negotiate revenue splits. This article explores the legal framework governing music royalties in India, including the impact of the Copyright (Amendment) Act, 2012, landmark cases, and ongoing contractual challenges. It also examines potential solutions, such as fairer revenue-sharing models, blockchain-based transparency, and stronger collective rights organizations, to ensure equitable royalty distribution for all stakeholders in the Indian music industry.

Introduction

The music industry has undergone a revolutionary transformation with the advent of digital streaming platforms like Spotify, Apple Music, JioSaavn, and Gaana. While these platforms have democratized access to music, they have also sparked significant disputes over royalty distribution, revenue-sharing models, and copyright ownership. Many artists and composers find themselves struggling for fair compensation, while record labels and streaming services engage in complex negotiations over revenue splits. This blog delves into the challenges of royalty disputes in the Indian music industry, examining the legal framework, landmark cases, and potential solutions for a more equitable system.

Understanding Music Royalties in India

The revenue generated from music streaming is distributed across various stakeholders in the form of different types of royalties:

Mechanical Royalties: Paid to songwriters and composers whenever their music is reproduced or streamed on digital platforms.
Performance Royalties: Earned when a song is publicly performed in venues such as concerts, clubs, gyms, and cafes.
Synchronization Royalties: Generated when a song is used in films, advertisements, or television shows.
Streaming Royalties: Direct earnings from streaming services, typically split between record labels, publishers, and artists.

Key Stakeholders in the Royalty System

Artists (Singers, Composers, Lyricists) – The creators of music who often face challenges in receiving fair compensation.
Record Labels – Control the master rights and receive a significant share of streaming revenues.
Music Publishers – Manage songwriting rights and distribute royalties to composers and lyricists.
Streaming Platforms – Facilitate music consumption and generate revenue through advertisements and subscriptions.
Royalty Collecting Societies – Organizations like the Indian Performing Rights Society (IPRS) and Phonographic Performance Limited (PPL India) oversee royalty distribution.

Legal Framework Governing Royalties in India

The Copyright (Amendment) Act, 2012

The 2012 amendment to the Copyright Act brought major reforms to ensure fair royalty distribution:

Royalty Rights for Composers and Lyricists (Section 18 & 19)

Previously, composers and lyricists often lost their royalty rights when they assigned their work to producers or labels.
The amendment mandates that even after transferring their rights, they are entitled to royalties whenever their work is commercially exploited.
Example: If a song penned by Irshad Kamil is streamed on Spotify, he will receive royalties even if a major label like T-Series owns the song.

Section 31D: Statutory Licensing for Broadcasters

This provision allows for statutory licensing of copyrighted works, impacting how streaming revenues are shared.
Recognition of Performers' Rights ensures singers also receive performance royalties.

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Contractual Issues in Royalty Sharing

Many artists face challenges due to unfair contract terms:

Contracts often transfer all rights to record labels, limiting artists' ability to claim royalties.
Revenue-sharing models lack transparency, leaving artists uncertain about their earnings.
Labels frequently take the lion’s share (sometimes 80-90%) of streaming revenue, leaving artists with minimal earnings.

Landmark Cases on Royalty Disputes in India

1. Indian Performing Rights Society Ltd. v. Eastern India Motion Pictures Association (1977)

The Supreme Court ruled that film producers held copyright over music used in films, limiting composers' rights to claim royalties.

2. Saregama v. Spotify India

Saregama sued Spotify for streaming its music without a licensing agreement, leading to a court order for Spotify to remove Saregama’s catalog until a deal was reached.

3. Tips Industries v. Wynk Music

The Bombay High Court ruled that Wynk Music had infringed upon Tips Industries' copyright by streaming content without a valid license, granting an injunction against Wynk.

Challenges in Royalty Distribution

1. Low Per-Stream Payouts

Platforms like Spotify pay fractions of a rupee per stream, making it difficult for artists to earn substantial revenue.
Record labels take the majority share, leaving minimal earnings for artists and composers.

2. Opaque Revenue-Sharing Models

The lack of transparency in royalty calculations makes it difficult for artists to track earnings.
Digital reporting systems are often too complex for artists to verify their payments.

3. Licensing and Rights Ownership Disputes

Record labels and publishers frequently engage in legal battles over licensing agreements.
Streaming platforms sometimes face takedown notices due to disputes over ownership rights.

Proposed Solutions for Fair Royalty Distribution

1. Strengthening Collective Rights Organizations

IPRS and PPL India should improve transparency and efficiency in royalty distribution.
Stronger regulatory oversight can ensure fair payouts to artists.

2. Fairer Revenue-Sharing Models

Implementing equitable split agreements between artists, composers, and labels.
Government intervention to regulate minimum streaming payouts for artists.

3. Blockchain and Smart Contracts for Transparency

Using blockchain technology can create transparent and immutable royalty tracking systems.
Smart contracts can ensure that artists receive real-time payments based on actual streaming data.

4. Strengthening Legal Protections

Introducing penalties for non-payment of royalties to artists.
Encouraging artists to negotiate better contracts with built-in royalty protections.

Conclusion

The music streaming industry in India presents both opportunities and challenges for artists, record labels, and publishers. While streaming platforms have made music more accessible, they have also highlighted the complexities of revenue-sharing and copyright enforcement. Legal reforms, technological innovations like blockchain, and stronger collective rights organizations can help establish a fairer royalty distribution system. By improving transparency and ensuring equitable revenue-sharing models, the industry can foster a more sustainable ecosystem for all stakeholders involved.