Disputes over streaming royalties are increasingly common in the music industry. Many artists signed recording contracts when digital exploitation barely existed. With streaming through platforms such as Spotify, YouTube and Apple Music now the principal source of revenue, the question regularly arises whether those older arrangements remain appropriate.
Amsterdam District Court recently ruled on such a dispute between an artist and record label Armada Music. The artist claimed entitlement to 50% of the revenue from streaming his music. The court rejected that claim. However, the artist succeeded on another point: he was entitled to terminate his recording contract.
The judgment provides useful insights for artists, labels and other businesses operating in the music industry.
A dispute over streaming royalties under a recording contract
The case concerned the remuneration an artist receives for digital exploitation of his music, including revenue from streaming and downloads through online platforms.
In the early 2000s, the artist entered into several exploitation agreements with a record label. The catalogue was subsequently acquired and ultimately came into Armada Music’s hands. Armada has since exploited the music, including through streaming services.
The artist considered the royalties for this digital exploitation too low.
The royalty rate for streaming
Under the existing arrangements, the artist received royalties of approximately 14% of net digital exploitation revenue. Armada subsequently decided to increase this rate to 22% retrospectively.
The artist still considered this too low and claimed entitlement to a substantially higher rate.
When does a 50% royalty apply to digital exploitation?
The dispute centred on how streaming should be legally classified under the recording contract.
The artist argued that streaming through platforms such as Spotify and Apple Music amounted to licensing to third parties. Under the contract, such licences would attract a royalty of 50% of net proceeds.
The court did not accept that reasoning.
The court held that streaming was not third-party licensing
The court held that digital exploitation in these circumstances could not be classified as third-party licensing within the meaning of the agreement. Armada was therefore not obliged to pay a 50% royalty.
The court concluded that the record label had correctly applied the contractual arrangements.
The significance of long-established contractual practice
The parties’ conduct also played an important part in interpreting the recording contract.
Since 2008, the artist had received royalty statements including revenue from digital distribution, consistently applying the same royalty rate. For approximately 15 years, he had not objected to this method of accounting.
The court considered that the record label could therefore assume both parties accepted this interpretation of the contract.
Reliance on authors’ contract law and fair remuneration
The artist also relied on Dutch authors’ contract law, arguing that the agreed streaming royalties were no longer fair.
Since 1 January 2026, certain provisions of authors’ contract law have also applied to older exploitation agreements. Nevertheless, this did not alter the outcome in this case.
The court held that the royalty rate customary in the music industry was not decisive. The question was whether applying the agreed remuneration was unacceptable according to standards of reasonableness and fairness. In the court’s view, it was not.
Terminating a long-term recording contract
Although the artist did not obtain higher streaming royalties, his claim concerning termination of the exploitation agreements succeeded.
The artist had terminated the contract on seven months’ notice. The court held that this termination was valid.
When can an exploitation agreement be terminated?
Under established case law, a continuing contract can in principle be terminated on notice even if it contains no provision to that effect.
The following circumstances were relevant in this case:
- The exploitation agreements were between 17 and 25 years old.
- The record label’s investments were relatively limited.
- The recordings were already complete when the agreements were entered into.
- Few additional investments had been made subsequently.
In these circumstances, the court held that a sufficiently weighty ground for termination was unnecessary.
Termination therefore takes effect on 1 July 2026. From that date, the record label must cooperate in transferring the exploitation rights back to the artist.
What the judgment means for the music industry
This judgment shows that obtaining higher streaming royalties through litigation based on older recording contracts can be legally difficult. The court looks primarily at the agreement’s wording and the way the parties have performed it over the years.
It also makes clear that long-term exploitation agreements do not necessarily continue indefinitely. Where investments have been recouped and reasonable notice is given, termination may be possible.
For artists, labels and others in the music industry, the case underlines the importance of clear arrangements for digital exploitation and streaming. With older recording contracts, it may be sensible to assess whether current exploitation and revenue sharing still correspond to the contractual arrangements and market developments.
