07 Aug 2015

Spotify sees Eternify off as the battle over royalties heats up

Eternify struck a chord with artists - so why was it terminated? The issue over artist royalties is unlikely to disappear any time soon, say Hayley Devlin and Martin Ochs.

Denys Prykhodov

Contention between music artists and those that distribute their work has always existed. With the marketplace shifting from the physical to the virtual, interesting legal issues arise. Just recently, Spotify found itself targeted by New York band Ohm & Sport over perceived unfair and inadequate royalty payments to artists, which are estimated to be $0.006 - $0.0084 per play.

Eternify app

Ohm & Sport conceptualised and created the app ‘Eternify’, intending for it to be released alongside their debut album. Through the app, users could set their chosen music on recurring 30-second loops, being the time period triggering a royalty payment. Theoretically, users utilising the app in this way for 24 hours each day, spanning over a full week, would be capable of generating over $100 in royalties for the artist, per user.

Spotify move

Eternify swiftly showed up on Spotify’s radar, prompting an equally swift silencing of the app. Ohm & Sport confirmed via Twitter that they had been 'forced to comply with a take-down notice from Spotify'. This raises the question of just how Spotify can exercise such great levels of control over its users and developers, especially considering the company hosts its own Application Programme Interface (API), ‘Spotify Developer’, which allows its users freer and wider interaction with the service.

Terms and conditions

One must look into the company’s terms and conditions, which provide the unequivocal right for Spotify to terminate access to its service both by the app and its users. The terms and conditions go one step further by enabling Spotify an ultimate right of termination – one that allows them to shut down any app, at any given time and for any given reason, without a requirement to answer to any other body on the matter. It appears this is exactly the fate met by the doomed Eternify app. Spotify has two sets of terms and conditions that exist separately from one another; a set for its general users, and one for the use of its API. These cover the company’s condemnation of Eternify, stating that artists are under no circumstances permitted to 'artificially increase play counts, follow counts or otherwise manipulate the Spotify Service (i) by using a script or automated process, (ii) by providing any form of compensation (financial or otherwise) to users, or (iii) by any other means.'  

Catch all 

The API terms also contain a blanket ‘catch all’ clause, designed to ensure an app will automatically be in breach of the API terms if it causes a user to breach his/her own terms of use. Specifically, the term states that an app is not to enable 'access to, or use of, the Spotify Service or Spotify Content in violation of the Spotify terms and Conditions of Use'. In addition to these breaches of the terms and conditions, Eternify failed to provide means for a user to click through to the real Spotify service, ensuring that it also breached the requirement that any 'metadata, cover art and audio preview clips' made available must include a link back to the platform.

Artist reward issues

Although the stunt by Ohm & Sport was short lived due to Spotify’s tight controls, it has once again brought the fight against apparent unfair artist reward into the mainstream media spotlight, following on from Taylor Swift’s dispute with Apple. An online environment does not favour an easy solution and sadly makes piracy far too easy. In turn, it renders it difficult for artists to receive fair royalties for the legitimate use of their work. It is unlikely that this issue pertaining to low-levels of royalties will disappear any time soon.

Hayley Devlin and Martin Ochs are Associates at law firm Hamlins LLP