I would like to update you on our discussions with Spotify following their decision to remove part of Novecore’s catalogue in August 2020.
As outlined in our September update, because of Spotify’s decision to investigate past royalties, we faced being financially liable for historic cases of artificial streaming committed by our users. Because there was no way of recovering royalties already paid to artists in breach, we reluctantly took the decision to freeze payouts to all our users. This was not a decision taken lightly, and I would like to thank all of you for your incredible patience over the past three months.
Today, I am delighted to announce that Novecore will resume paying out royalties. Please allow a few days for this to reflect on your Novecore account.
Following our discussions with Spotify, we have now received 100% of the Pound sterling and Euro royalties owed. Unfortunately, we have only received 30% of the total US Dollar royalties. Because of the significant amount that is still being withheld, we’re only able to pay users proportionately. This means that if you were owed £80, €50 and $100 in royalties, you would receive the full amounts in Pound sterling and Euro, and 30% of the US Dollar amount, $30 in this case.
For those artists receiving their royalties in US Dollars, we understand how frustrating this will be. I’d like to reassure all of you that Novecore is doing its utmost to resolve this. We are still engaged in ongoing discussions with Spotify, and are hopeful that any outstanding royalties will be paid out.
Once again, we kindly ask for your patience, and promise to be in touch with a further update as soon we have news.
On 23rd August 2020, we discovered that Spotify had removed a large proportion of Novecore’s catalogue from their platform, impacting tens of thousands of tracks and artists that we work with.
Despite seeking urgent clarification and repeatedly trying to contact the company, Spotify offered no explanation for their action. We were then notified on 18th September that Spotify had identified artificial streaming by a small number of Novecore users.
The use of artificial streaming is indefensible. As is clear from our terms of service, Novecore takes the issue extremely seriously and operates a zero-tolerance policy. Any artists found to be involved in or suspected of artificial streaming will not be paid royalties, regardless of the action taken by other platforms. When Spotify made us aware of the serious breaches of our terms and conditions, we immediately launched an investigation, identified the problem users and removed the culprits from our platform. Whilst the vast majority of our artists generate their streams legally and have not participated in this fraudulent activity, Spotify decided to remove our entire catalogue. This is why many of you will be unable to find or play your tracks on the streaming service.
On 27th August, Spotify informed us of their decision to withhold royalties. They also announced their intention to investigate past royalties paid out and may claim damages if they find evidence of longstanding artificial streaming. For a small distributor like ourselves, recovering royalties already paid to artists in breach would be incredibly difficult and leave us financially liable. In light of this, we have been forced to temporarily freeze payouts to all of our users.
We understand the impact this will have on artists and apologize to those unfairly affected. We would like to reassure users that we are working tirelessly to resolve the situation, and hope to shortly have in place measures to restore the releases of non-offending users on Spotify. The vast majority of artists using Novecore generate their streams legally, and we’re doing everything in our power to ensure royalties earned fairly are paid out as quickly as possible. We fully appreciate the value many of our artists place on being able to access Spotify, and our legal team are currently working hard towards a resolution. We will also be seeking reassurances that legally achieved overall stream counts and placements in user generated playlists will be maintained as and when Spotify returns releases to their platform.
To prevent future disruption, we are investing significantly in data analytics to identify bad actors with greater speed and efficiency. At Novecore we have always prided ourselves on our willingness to cooperate openly and constructively with businesses and artists across the industry whenever an issue arises. We therefore have every confidence that this can be resolved quickly.
Looking to the future, unfortunately, no matter how sophisticated the algorithm and detection mechanisms, there will always be a small number of determined users that slip through the net. Artificial streaming is an industry-wide problem and costs artists hundreds of millions of dollars every year. The question is how best to deal with the issue. As the world’s leading provider of streaming services, we place enormous value on having a constructive relationship with Spotify. However, we don’t believe removing all of a distributor’s users is the right way to go. Apart from the platform they share, the artists using Novecore who sell their music honestly have no connection with those responsible for the infringement. Should this happen again, we would invite Spotify to distinguish between the two.
We empathize deeply with the anger and frustration felt by you, our users. Many of you have done the right thing, generated your streams legally, and find yourselves caught up in a situation through no fault of your own. As we work through this and try to secure the best outcome for our artists, we kindly ask for your patience. Everything Novecore does as a business is with you in mind, and we value your continued trust and support.
We will be in touch with a further update as soon we have news.