Finances dictate Spotify’s response to controversy

In protest against perceived misinformation about the inclusion of coronavirus in Joe Rogan’s podcasts, several musical artists have called for their songs to be removed from the popular digital platform. The controversy highlights issues of rights management, censorship and potential revenue.

The current Spotify controversy sparked by a podcaster highlights the many landmines riddled with the new digital media landscape where consumers have a wealth of options, according to music industry and business law experts. University of Miami.

Serona Elton, director of the music industry program and associate dean of administration at the Frost School of Music, noted the proliferation of media outlets and social media sites that have changed the power paradigm for music platforms. digital media like Spotify.

“Platforms are trying to increase the diversity of content they offer,” Elton said. “With more varied content inevitably comes a greater risk that some of it will be seen as offensive to platform users and other content creators. From time to time, platforms will have to choose sides. That’s what happens in this case.”

Elton, who has worked with three different major record label groups for more than two decades, noted the long history of instances and ways in which artists have spoken out or taken action to comment on events in culture in the sense large.

“This is another remarkable and important example,” she said. “And like many companies before them that have been criticized by the public, Spotify must weigh both the impact from a public relations perspective and the impact, if any, on their bottom line. As a listed company on the stock market, it also has a duty to its shareholders.

The current controversy with the major music streaming service erupted when Joe Rogan, who signed a $100 million deal in 2020 with Spotify for the exclusive rights to ‘Joe Rogan Experience’, released information perceived to be inaccurate and misleading. regarding the COVID-19 virus on his podcast. . Rogan is the headliner of Spotify’s podcast division, the centerpiece of its new business strategy.

Famous musicians Neil Young, Joni Mitchell and others have taken offense to the misinformation being spread on the same platform that generates massive revenue from their music. The artists saw misinformation as a threat to young listeners around the world “who think everything they hear on Spotify is true”.

In protest, they persuaded their record companies to order Spotify to remove their recordings from the platform. Other popular podcasters on the platform, including Brené Brown, Prince Harry and Meghan Markle, have joined a growing list of personalities who have also raised concerns.

In response, Spotify announced that it would start posting COVID-19 content advisories that recommended tuning into its health and science channel. Additionally, Rogan recently said he would strive to be more balanced in his coverage of controversial topics.

“Spotify needs to run the numbers as part of its analysis. When they decided to pay $100 million for the rights to the Rogan podcast, they had to calculate the increase in their subscription and advertising revenue from delivering the exclusive content,” explained Elton, who pointed out that the terms of this contract are unknown and therefore it is not clear if Spotify could terminate the contract even if they wanted to.

“Spotify will now also have to calculate the revenue they may lose from subscribers and advertisers who leave the platform because of the Rogan podcast,” she said, adding that the potential impact of the artists’ protest remains. to be determined.

From a legal standpoint, Spotify’s censorship is not an issue in this controversy, according to Ann Olazábal, professor of business law at Miami Herbert Business School.

“Free speech and its flip side, censorship, emanate from the Bill of Rights and serve to constrain the government, not what private actors like Spotify may or may not do,” Olazábal said. “In other words, Spotify’s right to remove or edit Rogan’s podcasts is not limited by the First Amendment.”

That right, if any, is circumscribed by the written agreement of the parties, she acknowledged, adding that Spotify’s public statements have indicated that the only limitations the contract imposes on Rogan’s podcast are to comply with Spotify’s General Content Policy, applicable to all of its content providers. .

“Obviously, this policy is quite flexible, and even then Spotify likely retains the legal right to waive Rogan’s obligation to comply with it,” Olazábal noted. “We’ve seen other internet platforms bend their rules for users of high profile content, it’s not illegal. Free speech is just not at issue here, at least from one point of view. legal point of view.

Nor does the controversy involve Section 230 of the Communications Decency Act (CDA), the legislation enacted in 1996 that allows internet platforms like Spotify to post content without having to moderate or vet it for harmful effects, according to the professor of business law.

“While medical and scientific experts have warned that misinformation about vaccines or COVID-19 generally creates public distrust, Rogan’s podcast does not yet appear to have caused specific harm to any specific person who would have the right to sue Spotify about it,” Olazábal said. . “If there were and Spotify was sued, the company could avoid liability by pointing to Section 230. Although some may want to use this moment to push for a CDA amendment in order to reduce the general immunity of internet platforms, as it stands the law simply does not apply to this controversy.

Elton said the controversy highlights rights management issues around who has the power to direct a platform to remove content, a topic she shared with students in her contracts class. the music industry.

She explained that recording artists signed to record labels have no right to control the distribution of their recordings. “The financial investment a record company makes in producing and marketing recordings generally gives them the power to decide how to monetize the content in order to recoup their investment.”

Does the influence of artists and the reaction and response of consumers exert more force today when a controversy like this surfaces?

“When artists and celebrities support a cause, it can make a difference and influence business decisions,” Elton said.

“Today, social media and the vastly increased number of outlets has given artists far more influence on public opinion than they ever have before,” she added. “And public opinion can greatly influence a record company or digital platform, even when an artist does not have contractual control.”

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