It’s been a challenging start to 2016 for Spotify’s business affairs team.
First, right at the end of last year, the streaming company was served a $150m class action lawsuit from songwriter and artist David Lowery.
It claimed that Spotify “unlawfully reproduces and/or distributes copyrighted musical compositions” in the US market and “profit[s] off its own unlawful conduct”.
In short, Lowery argues that Spotify has publicly acknowledged that it has not correctly paid US mechanical rights owners the money they are due – and that the company is subsequently making interest by keeping hold of this sum.
Now Spotify has been hit by a second lawsuit, this time arguing that songwriters should get more than $200m from Daniel Ek’s company.
US songwriter and publishing company owner Melissa Ferrick filed her class action complaint in the US District Court in Los Angeles on Friday (January 8).
Like Lowery, Ferrick is claiming damages for Spotify’s alleged “wholesale copyright infringement” on behalf of all songwriters whose musical compositions were “reproduced and distributed without a license during the last three years”.
It argues: ‘Spotify did not have and does not have a comprehensive system of music publishing administration in place necessary to license all of the songs embodied in phonorecords which it ingests and distributes by means of interactive streaming and temporary downloads. Rather than decline to distribute phonorecords embodying musical compositions that are unlicensed, however, Spotify elected instead to engage in wholesale copyright infringement.’
“Spotify has elected to engage in wholesale copyright infringement.”
Melissa Ferrick lawsuit
Ferrick, who owns the companies Nine Two One Music and Right On Records/Publishing, claims that her own songs have been streamed “approximately one million times” on Spotify without appropriate mechanical licenses.
Her suit echoes Lowery’s assertion that songwriters whose copyright has been infringed are entitled to recover up to $150,000 in statutory damages for each unlicensed composition played on Spotify.
Ferrick cites Spotify’s recent announcement that it was building its own publishing royalties database as evidence of its wrongdoing.
“The known failure by Spotify to obtain licenses for all of the musical compositions that it is exploiting caused it to recently announce that it ‘will invest in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem’,” reads the lawsuit.
“That is an investment and process that Spotify should have undertaken before it decided to reproduce and distribute phonorecords embodying unlicensed musical compositions to the Service’s millions of users, not over four years after Spotify launched the Service in the United States.
“At this point, Spotify’s failure to properly obtain licenses is much more than what it euphemistically describes as an “administration system” problem; it is systemic and willful copyright infringement for which actual and statutory damages are the remedy.”
Ferrick is being represented by the Los Angeles law firm Gradstein & Marzano.
In response to Lowery’s lawsuit – which you can read in full through here – Spotify spokesperson Jonathan Prince commented: “We are committed to paying songwriters and publishers every penny. Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong, or incomplete.
“When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities. We are working closely with the National Music Publishers Association to find the best way to correctly pay the royalties we have set aside and we are investing in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem for good.”
The timing of Lowery’s suit was intriguing: it was filed just days after Spotify announced that it was investing in its very own comprehensive global rights database for publishers and songwriters.
Spotify is believed to be working in conjunction with the US National Music Publishers’ Association and other worldwide publisher organisations to build the database.Music Business Worldwide