Meet the music entrepreneur who's taking on Spotify and other streaming services

Melissa Ferrick's 150 songs have played about a million times on Spotify. But the 45-year-old independent artist says the popular streaming music service has shortchanged her by failing to fully license her songs.

The man bolstering Ferrick's claims, laid out in a $200-million lawsuit, is music technology entrepreneur Jeff Price. The former record label owner has made a career out of helping artists get paid streaming royalties — and being a thorn in the side of Spotify and other music companies.

Ferrick hired Price and his New York royalty collection start-up Audiam last year while she was preparing to release her new album. Price pored over her pay statements and found she wasn't getting royalties to which she was entitled. He later referred her to an attorney.

See more of Entertainment’s top stories on Facebook >>

"I knew something was wrong, I just wasn't exactly sure what it was," said Ferrick, an indie rock musician from Massachusetts. "Jeff Price identified the problem. He's extremely important."

The brash 48-year-old has made a name for himself as an outspoken and controversial voice for aggrieved musicians in the digital age. He's providing them with data to take on Spotify and other streaming services that are upending the music industry.

Price's research plays an important role in the lawsuit Ferrick recently filed against Spotify, which has 75 million users worldwide and is valued at more than $8 billion. It's the second lawsuit in a month seeking class-action status on behalf of musicians who allege the Swedish company has infringed on their copyrights. The first action was filed by alternative rocker David Lowery.

The cases highlight the broader debate over how artists are compensated as people buy fewer albums and increasingly get their music from on-demand services. Top acts such as Adele and Taylor Swift have resisted putting their new music on Spotify, taking issue with what they view as paltry royalties from its service.

"The poor songwriters of the world have been exploited and decimated and pilfered," Price said in an interview. "They have been raked over the coals in ways you can't even begin to imagine."

Behind the heated rhetoric is a dispute over so-called mechanical royalties, which date to the early 20th century and the reproduction of musical compositions on player-piano rolls. These are royalties that cover the composition — the lyrics and melody — and go to the songwriters (as distinct from the royalties paid for sound recordings that go to record labels).

Spotify pays roughly 10% of its annual revenue in mechanical royalties, which works out to a rate of about seven-hundredths of a cent per stream.

Finding who gets paid for what songs is tricky, given the Byzantine nature of copyrights.

Enter Price. He and his nine employees work on the 11th floor of a midtown Manhattan office building known for once housing music publishers that supported the likes of Carole King and Neil Sedaka.

Musicians hire Audiam to handle their copyrights and collect royalties from Spotify, Rhapsody, YouTube and other popular online music destinations. Price and his team spend hours sifting through spreadsheets of music metadata and royalty statements, comparing what musicians are supposed to be earning, versus what they've actually received.

Audiam matches the sound recording statements with the mechanical royalty payouts to spot discrepancies.

The company takes 15% to 30% of the royalties it collects. Price declined to discuss Audiam's revenues, but said his firm has collected $15 million in royalties since launching in the summer of 2013.

Gregory Butler, a songwriter, producer and chief of digital music start-up WholeWorldBand, credits Price for helping songwriters press their claims against Spotify and other streaming services.

"I believe that Price has been instrumental in this particular attack on Spotify," Butler said. "He seemed to be one of the first people who were publicly questioning what was happening there."

Price began his career running now-defunct SpinArt Records, which boasted artists including the Pixies and Echo & the Bunnymen.

In 2005, he founded TuneCore, a digital music distributor for independent artists. There, he earned a reputation as a music industry gadfly, publishing provocative blog posts and ranting about perceived injustices during panels and business conferences.

He was fired from TuneCore in 2012 amid what Price, in a 36-page 2014 court document, described as bitter rift between him and a major equity investor. According to Price's affidavit, he was ousted after TuneCore experienced a cash crisis that prompted the investor to express a lack of confidence in him. Price says he was fired without cause and that the investor had tried to force TuneCore into insolvency.

With the rise of streaming music, Price saw an opportunity to build a business by helping artists navigate the labyrinth of copyright payments on the Internet.

Price has been vocal in singling out Spotify. In October, Audiam publicly said that Chicago-based Victory Records' catalog had been streamed 53 million times without getting its publishing royalties.

Price says the problem is widespread, even among big-name clients such as Jack White, Red Hot Chili Peppers, Metallica and Bob Dylan. For example, he found 750 Dylan recordings for which the songwriter hadn't received royalties.

And the problem isn't confined to Spotify, he says. Price estimates online music services including Spotify owe as much as $75 million in publishing royalties for music streamed over the last 13 years. By Audiam's calculations, streaming services have failed to pay songwriting royalties on around 20% of streams.

"Once you have the data, it's like putting on a pair of glasses and seeing the world the way it is," Price said.

Spotify has disputed claims that it is taking advantage of songwriters, but concedes it does not always know who is entitled to royalties because it lacks the necessary data.

"We are committed to paying songwriters and publishers every penny," said Spotify spokesman Jonathan Prince.

Spotify sets aside royalties until it can identify the correct rights holders. The company owes at least $17 million to songwriters, a small fraction of the $3 billion in royalties it has paid since 2008, said a person with knowledge of the matter who is not authorized to speak publicly.

The service has been in negotiations with the National Music Publishers Assn. for months to resolve the matter, and Spotify has said it's investing in a system to adequately pay songwriters.

David Israelite, head of the National Music Publishers Assn., said he sympathizes with artists like Ferrick. However, he argues, direct negotiations with the streaming services are more effective than the lawsuits that Price has been encouraging.

"It's going to get resolved through negotiation rather than protracted litigation," Israelite said.

Though he's helped artists such as Jimmy Buffett and companies like Ruthless Records, Price's penchant for publicity and profanity-laced rants have won him some enemies, even among music industry peers with whom he's clashed in online forums.

"People yell when they feel like they're not being heard," Price said. "Do I have I big mouth? Yeah, sometimes. But I use it very strategically."

ryan.faughnder@latimes.com

Copyright © 2016, Los Angeles Times
A version of this article appeared in print on January 19, 2016, in the Business section of the Los Angeles Times with the headline "COMPANY TOWN - Time to face the music - Entrepreneur Jeff Price is taking on Spotify and other streaming services over unpaid royalties" — Today's paperToday's paper | Subscribe

UPDATE

8:55 a.m.: This post has been updated with additional information about Jeff Price's ouster from TuneCore. 

It was originally published at 3 a.m.

68°