Spotify To Pull Out of Uruguay Over Poorly Written Law

It’s not unusual for lawmakers in any country to try to do the right thing only to fall pry to unintended consequences due to a poorly written law. This could be a hastily written amendment to a bill that is destined to pass, or just a bill that was either poorly conceived or not thought through. This is what just happened in Uruguay and Spotify has made the decision to pull its service from the country as a result – and it’s actually a good thing for artists.

Spotify pulls out of Uruguay over poorly written law

Making The Unfair Even More Unfair

In Uruguay artists were not being compensated for when their songs were streamed online (songwriters still got paid), a situation that almost everyone agreed should be changed. The lawmakers in the Parliment of that country thought they were doing artists a favor by adding three paragraphs to a massive budget bill that they thought would finally get artists the royalties they deserve. Instead it’s caused so many problems that Spotify actually did the right thing by pulling out of the country.

What could be so bad? First, performers lose all their exclusive rights, which includes the right for performances to be fixed in recordings, for these recordings to be copied and distributed to the public, to be transmitted by wire or wirelessly, or to be broadcast (live or recorded performances). These are basic rights that every artist in most countries enjoy. They did in Uruguay as well until this well-meaning but poorly written law passed.

What artists get is a right to “fair and equitable remuneration” if any of the above occurs, but they can’t obtain this remuneration themselves. Only government-approved collection societies can collect the money. The problem is that the few lines of law passed by the Parliament of Uruguay forgot to say who is supposed to pay.

Who’s Paying?

So artists are supposed to get paid money that is collected by a performance rights organization (think BMI or ASCAP) but no one knows where this money is coming from! And it’s possible that a lot of innocent people could get caught up in having to pay instead.

It’s possible that if you provided a YouTube link to a video that contained music that you could be forced to pay, even if YouTube has already paid the license. It’s possible that Spotify or any other music streamer might be forced to pay an additional license fee even though they’re already paying royalties.

And if Spotify were to raise its rates in the country to compensate, that extra money would just go the the record labels and never make it to the artists.

So Spotify made the decision that until this gets worked out, it’s best not to have a presence in Uruguay at all.

Copyright law is hard, and thanks to ever-changing and improving technology, it’s more difficult than ever to craft new laws that not only cover all aspects of music and art today, but in the future as well. It’s clear that taking the most difficult path is infinitely better than tacking on a band aid for a quick fix, as Uruguay has found out.

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