Sep 15, 2019 | Updated: 10:59 PM EDT

Spotify Update: Mediachain Startup To Aid In Unpaid Royalties Cases

Apr 27, 2017 04:52 PM EDT

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Spotify has been doing a fine job streaming music to its subscriber but will need to address the issues on royalties soon. It is an ongoing problem, failing to settle the fees artists should be making. In fact, most reportedly receive less than half. Hopefully, the entry of startup Mediachain can ease the burden.

Spotify has acquired Mediachain, a bitcoin-style secure database pegged to help manage the information of the media company. Mediachain can eventually facilitate in handing out the proper payments though it would still need some direction on who to pay due to a large number of rights holders and content creators, Venture Beat reported.

Speaking of databases, it is singled out as one of the main issues that Spotify may have overlooked. According to a post on their official website, no central database exists thus one reason why the determining the rights ownership and corresponding payments have been erratic. Seeing how long Spotify has been rendering the service plus its growing number of artists and subscribers, one can just imagine the work ahead.

A slight piece of good news is that Spotify can at some point resolve the problem. It may take some time but it does veer away the company from class action lawsuits. In 2015, Spotify was hit with a $150 million lawsuit with the company unlawfully distributing copyright material to 75 million users.

Spotify acknowledges their shortcomings and has vowed to do better. The problem there is the timetable, something that the company is obviously unable to commit to. The Mediachain acquisition is timely and at least sets Spotify in the right direction. The losses resulting from the royalties issue may be hard to overcome but it does somehow promise to put a stop to the bleeding caused by a costly oversight.

The latest RIAA report showed that while Apple pays between $12 and $15 per 1,000 streams, Spotify pays around $7. YouTube, however, remains the worst at around $1 per 1,000 streams, 9 to 5 Mac pointed out.

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