Labels threaten to pull music from Napster over late royalty payments
Late payments cause industry backlash against Napster.
What’s happened?
Napster is under fire from record labels and distributors after failing to make royalty payments on time. According to Billboard, over half a dozen distributors and record labels have reported missing payments stretching back “well over a year”. Napster has reportedly blamed its struggles to secure funding for these delays.
Some rightsholders are now considering drastic measures, including removing their catalogues from the platform or halting new releases.
What this means for Napster and the industry
The fallout from these late payments could be catastrophic for Napster. Losing content from major labels and distributors threatens the platform’s ability to retain subscribers, as users may abandon the service if it’s missing their favourite music. But, this could also deter investors from funding, creating a vicious cycle of financial difficulties.
For music streaming services, this is a reminder that operating on a business model that demands up to 70% of revenue being paid out as royalties is challenging, particularly without a large subscriber base.
This isn’t an isolated issue. Sony Music’s recent withdrawal of its catalogue from the African streaming service Boomplay over similar payment disputes highlights how financial instability in the streaming sector is a recurring theme.
Napster’s rocky road in the music industry
Napster is no stranger to trouble within the music industry. Once synonymous with facilitating music piracy in the late 1990s, the platform faced lawsuits that forced it to transition into a subscription streaming model. Later, it merged with Rhapsody and rebranded under the Napster name.
Despite brief successes as a B2B music provider, Napster has struggled to stay relevant in the competitive streaming landscape. Over the years, it has been acquired by companies hoping to leverage its brand for innovations, ranging from virtual reality to cryptocurrency. Who knows, maybe artificial intelligence is next on the cards?
Broader implications
While Napster’s impact on industry revenues may be limited compared to larger players, labels and distributors are justified to expect timely and reliable payments for. Whether these rightsholders choose to remove their catalogues from Napster remains to be seen.