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Spotify is one of thebiggest music streaming apps on Android, and it consequently accounts for a lion’s share of earnings for artists through music streaming. Copyright law usually governs the payment of royalties from streaming, and that’s also the case in Uruguay, reportedly the world’s 53rd largest market for music. However, the local government voted a budgetary bill into existence in October, which has prompted Spotify to play the victim card and shut shop in the country. However, the amendments may not be as far-sighted as they seem.
Before we get to the law and Spotify’s decision, it is critical to understand that any royalties earned from the distribution of music are paid to publishers, record labels, and composers (viaThe Guardian). It is then the label’s duty to give every musician and artist their designated share, and that’s what Spotify presumes in every market where it operates. However, Uruguay is a little unconventional in that royalties don’t go on to reach musicians unless they are also composers or lyricists. This local oddity also extends into audiovisual media, where screenwriters and directors aren’t compensated with a fair share of royalties from distribution (viaHeise Online).
To address this, Uruguay createdArticles 284 and 285as budget bills, amending the copyright law so “authors, composers, performers, directors and screenwriters” are entitled to “fair and equitable remuneration.” In response to this,Spotify released a statementexplaining how it already pays labels and composers in the country around 70% of the earnings from streaming on the platform. It went on to explain its interpretation that the new law mandating equitable remuneration would be akin to paying twice for the same music, in turn making business in Uruguay unviable.
The loosely worded amendment doesn’t say who should pay the musicians. Nonetheless, Spotify could take the onus and increase subscription pricing for Premium customers locally, or pepper the streams with ads, but the royalties can’t be handed to the deserving musicians directly and equitably. Instead, the amendment mandates that Spotify route those payments through the record labels currently receiving payments, or state-managed collecting societies the musicians have signed up with.
For its part, Spotify will stop accepting new Premium subscription requests in the country on December 28, and all current billing will halt when December ends, shifting everyone to free-tier accounts. January will mark Spotify’s exit from Uruguay, and come February, the service will shut down altogether. Although Spotify seems to be playing the victim here, the three-paragraph amendments may hurt the same underpaid musicians they hope to benefit.
The system of collection societies we mentioned earlier mandates payment for licensing an artist’s work, even if the artists themselves don’t want any money. In principle, this could potentially kill Creative Commons licensing and make the media disproportionately hard to use, even for one-off instances. Anyone offering links to the media online, and anyone sharing said links are automatically presumed to be licensed distributors, who must pay for their activities.
Moreover, the law doesn’t make exceptions for educational and non-commercial use. So, every professor would need to pay for licensing before they can screen local films for their students. How this law will be implemented at the grassroots is still unclear, but in any case, Spotify wants no part of this debate and has exited Uruguay, dealing a massive blow to the country’s music industry and its potential earnings for the foreseeable future.
UPDATE: 2025-06-27 04:41 EST BY MANUEL VONAU
Spotify to resume service in Uruguay
Spotify’s threat to leave Uruguay seems to have made it possible for the government to overthink the changes to its copyright law and find a way to allow the streaming service to resume operations. Ina press release, Spotify writes,
We’re pleased to share that Spotify will remain available in Uruguay and will continue to give artists the opportunity to live off their art. Meanwhile millions of fans will still have the chance to enjoy and be inspired by their favorite artists.The Uruguayan government has demonstrated that it recognizes the value Spotify provides to local artists, songwriters, and fans. The clarification to the recent changes in music copyright law means that the rightsholders—to whom Spotify already pays roughly 70% of every dollar it generates for music—should be responsible for these costs.
