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Spotify u-turns on Uruguay exit after government gives assurances on artist payments

Image Credits: Sergi Alexander Stringer
Image Credits: Sergi Alexander Stringer

After receiving assurances from the government that the copyright law reforms it is making would not result in additional expenses for Spotify, the company has changed its mind about its plan to withdraw from the Uruguayan market.

Suppose you are not keeping up with everything happening in Uruguay’s music streaming sector. In that case, the story may have gone like this: In October of last year, Uruguay enacted new legislation that, among other things, mandated that artists should be compensated in a “fair and equitable” manner for their work. When it comes to recorded music, the term did not only refer to the primary “featured” artist; instead, it encompassed all of the musicians who contributed to a recording, including composers, performers, session musicians, and even extra musicians.

The problem, as far as Spotify was concerned, was that it asserted that it already paid record labels and publishers around 70 percent of each dollar it generated from music sales. As such, the company sought clarity on who would bear responsibility for paying artists who may have contributed to a record; it wanted to ensure that the people it already pays money to directly assumed the responsibility for issuing payments to whoever else the new law may cover from the money they already receive.

This month, Spotify wrote in a blog post that “the changes in this bill could force Spotify to pay twice for the same songs.” Suppose the government does not clarify that record labels and publishers, to whom we pay approximately 70 percent of the total, should bear the responsibility for these costs. In that case, the company’s business of connecting artists and fans will become unsustainable.

Consequently, Spotify has stated that it will gradually discontinue its service in Uruguay beginning on January 1, 2024, and will terminate its operations one month later.

The attempt by Spotify to place the blame for its imminent departure at the door of the government was successful as well. As a result, more than forty thousand individuals signed a petition requesting that the government of Uruguay ensure the “permanence of Spotify in our country.”

At the time, Teledoce asserted that President Luis Lacalle Pou got involved in the conflict and told reporters that the administration was “in talks” to resolve it. He stated, “You must be balanced; we understand that it is a very important platform.”

Consequently, regardless of who was to blame for the issue, it was shaping up to become a political nightmare. This headache has now appeared to be alleviated by guarantees that Spotify will not be held accountable for any additional expenditures about artist payments.

“The Uruguayan government has demonstrated that it recognizes the value that Spotify provides to local artists, songwriters, and fans,” Spotify noted in a post published today. “The clarification to the recent changes in music copyright law means that the rightsholders, to whom Spotify already pays approximately 70 percent of every dollar it generates for music, should be responsible for these costs,” the statement reads.

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