Spotify will discontinue its service in Uruguay due to a new copyright law that mandates fair and just compensation.

Spotify will be discontinuing its operations in Uruguay due to the enactment of a new copyright law that mandates fair and just compensation for creators such as authors, composers, performers, directors, and screenwriters.

During October, the parliament of the country passed a budget bill that introduced two new provisions. According to Article 284, social media and the internet will now be considered as platforms for which performers will receive financial compensation when their songs are shared through a link online.

Article 285 will put into copyright law the “right to a fair and equitable remuneration” for all “agreements entered into by authors, composers, performers, directors and screenwriters with respect to their faculty of public communication and making available to the public of phonograms and audiovisual recordings”.

Spotify released a statement on November 20th, stating that if the 2023 Rendición de Cuentas law remains unchanged, the streaming service will have to gradually discontinue its operations in Uruguay starting from January 1st, 2024 and completely withdraw from the market by February 2024.

According to a report from Music Business Worldwide, a company from Sweden is seeking clarification on who is responsible for covering the extra expenses of paying musicians. They argue that if streaming platforms are responsible, it would mean paying for the same music twice.

The statement went on to say that Spotify currently pays out almost 70% of its music-generated revenue to record labels and publishers who hold the rights to the music and also compensate artists and songwriters. They believe that further payments would negatively impact their business.

The platform stated that it was responsible for a 20% increase in Uruguay’s music industry in 2022. During that year, the country was ranked as the 53rd biggest music market in South America.

Spotify has announced changes to its payment policies for artists and labels which include reducing fake streams, setting a higher minimum length for tracks that contain “noise” like rain and sea sounds, and removing payment for songs with less than 1,000 streams. This change has sparked controversy as it could result in an average annual loss of £2.39 in royalties for these songs.

According to Variety, Spotify states that only 0.5% of their tracks have less than 1,000 streams and some distributors choose to not compensate for such small numbers by keeping the money.