Discussions about the level of streaming royalties are becoming increasingly common in the music industry. Many artists signed record deals at a time when digital distribution was virtually non-existent. Now that streaming via platforms such as Spotify, YouTube and Apple Music has become the main source of income, the question regularly arises as to whether those old agreements are still appropriate.
The Amsterdam District Court recently ruled on such a dispute between an artist and the record label Armada Music. The artist claimed that he was entitled to 50 per cent of the revenue from streaming his music. The court dismissed this claim. At the same time, the artist was successful on another point: he was permitted to terminate his record contract.
The ruling offers interesting insights for artists, record labels and other businesses operating in the music industry.
Dispute over streaming royalties from a record deal
The case centred on the remuneration an artist receives for the digital exploitation of their music. This included, among other things, income from streaming and downloads via online platforms.
In the early 2000s, the artist had entered into various licensing agreements with a record company. This catalogue was later acquired and eventually ended up with Armada Music. Since then, Armada has been licensing the music, including via streaming services.
According to the artist, he received an insufficient royalty payment for this digital exploitation.
Royalty rate for streaming
Under the existing terms, the artist received approximately 14 per cent in royalties on the net revenue from digital exploitation. Armada later decided to increase this percentage retroactively to 22 per cent.
The artist still felt that was too low and argued that he was entitled to a significantly higher royalty rate.
When does a 50% royalty apply to digital exploitation?
The crux of the dispute was the question of how streaming should be legally classified within a record contract.
The artist argued that streaming via platforms such as Spotify and Apple Music should be regarded as the granting of a licence to third parties. According to the contract, such licences would be subject to a royalty of 50 per cent of the net proceeds.
The court did not accept this line of reasoning.
According to the court, streaming does not constitute a third-party licence
According to the court, digital exploitation in this situation cannot be regarded as the granting of a licence to third parties within the meaning of the agreement. Consequently, Armada was not obliged to pay a 50 per cent royalty.
The court concluded that the record company had correctly applied the contractual terms.
The importance of long-term contractual practice
The established practice between the parties also played an important role in the interpretation of the record contract.
The artist had been receiving royalty statements since 2008 that included income from digital distribution. The same royalty rate was applied in each case. For around 15 years, the artist raised no objection to this method of settlement.
According to the court, the record company was therefore entitled to assume that this interpretation of the contract had been accepted by both parties.
Invocation of copyright contract law and fair remuneration
The artist also invoked copyright contract law, arguing that the agreed royalty rate for streaming was no longer fair.
Since January 1st 2026, certain provisions of copyright contract law have also applied to older exploitation agreements. However, this did not lead to a different ruling in this case.
According to the court, the standard royalty rate in the music industry is not the decisive factor. The question is whether the application of the agreed fee is unacceptable by standards of reasonableness and fairness. According to the court, this was not the case here.
Termination of a long-term record contract
Although the artist did not receive a higher streaming royalty, his claim to terminate the exploitation agreements was successful.
The artist had terminated the contract with seven months’ notice. The court ruled that this termination was legally valid.
When can a management agreement be terminated?
According to established case law, a contract of indefinite duration may, in principle, be terminated even if the contract itself makes no provision for this.
A factor in this case was that:
- the operating agreements were between 17 and 25 years old
- the record company’s investments were relatively limited
- the recordings were already complete when the contracts were signed
- few additional investments were made subsequently
In these circumstances, the court ruled that no serious grounds were required for termination.
The termination will therefore take effect on July 1st 2026. From that date, the record company must cooperate in the transfer of the exploitation rights back to the artist.
What this ruling means for the music industry
This ruling demonstrates that it can be legally challenging to enforce higher streaming royalties through legal proceedings on the basis of older record contracts. The court primarily considers the wording of the agreement and the manner in which the parties have implemented it over the years.
At the same time, the ruling makes it clear that long-term operating agreements do not always continue indefinitely. Once investments have been recouped and a reasonable notice period is observed, it may be possible to terminate such an agreement.
For artists, labels and other parties active in the music industry, this case highlights the importance of clear agreements regarding digital exploitation and streaming. In the case of older record contracts, it may be wise to have them reviewed to determine whether the current exploitation arrangements and revenue sharing still align with the contractual terms and market developments.
