Spotify has been hit by a lawsuit from an independent music company which says it is seeking “over $1bn in damages” from the streaming platform.
The complex suit, filed by Florida-based Sosa Entertainment LLC and its sister company – royalty collection firm Pro Music Rights LLC (PMR) – alleges a series of wrongdoings by Spotify.
Both Sosa and PMR are owned by Jake P. Noch.
Sosa claims that it has not been paid full royalties associated with over 550 million streams on Spotify.
The tracks associated with these streams, says the company, were removed by SPOT in a process which began “in or about” May 2017, and were chopped from the service “without advance notice [and] without ever telling [Sosa and PMR] why their songs were removed”.
According to the lawsuit, Spotify “manually blanket-banned” the tracks, and then “deliberately and maliciously blacklisted from its platform the Plaintiffs and their founder, Jake Noch, along with each and every single artist, composer, and writer associated with [the parties]”.
In a bid to prove the legitimacy of streams within the 550m-plus plays in question, Sosa notes: “Spotify added at least one of Plaintiffs’ tracks onto a very popular, if not the most popular, Spotify-sponsored playlist in or about March 2017 – New Music Friday – which, at that time, had approximately 3,016,144 followers.”
The allegations from Sosa – a former member of independent rights agency Merlin – then get more serious.
Sosa claims that, following the removal of its tracks from Spotify, SPOT told Merlin that it believed “the number of streams by Sosa artists was disproportionately high; and, according to Spotify, this could only be explained by [these] streams somehow being manipulated”.
As a result of Spotify’s “false statements”, says Sosa, Merlin “wrongfully” terminated its relationship with the label, before recommending that a number of other streaming platforms – including Deezer, SoundCloud, Google Play, Saavn and Vevo – also remove Sosa’s catalog, due to what Merlin itself was now describing as “fraudulent streaming activity”.
Sosa, however, strongly denies this claim. In fact, it slings a lot of mud in the other direction.
It alleges that Spotify’s decision to remove its content was actually “a bad faith tactic to exert pressure on Merlin to exclude Sosa from [its] equity participation” in Spotify.
Merlin, of course, sold its equity stake in Spotify when the latter company floated on the New York Stock Exchange in April last year. Merlin’s shares were believed to be worth over $100m when the transaction was completed.
Sosa alleges that the removal of its catalog from Spotify ensured that it didn’t get to participate in this sale, which, it says, would have seen it receive “tens of millions of dollars”.
“Merlin allocated those proceeds, pro-rata, to its members, based on the value of Spotify royalties each member received during the period of Merlin’s agreement with Spotify,” Sosa explains.
It goes on: “The music press was starting to cover Sosa’s artists and growth: thousands of articles were being written about it, including on such websites as xxlmag.com, kollegekidd.com, thisis50.com and worldstarhiphip.com.”
Sosa alleges: “While Sosa’s social media and marketing campaign were starting to pay dividends for Sosa, Spotify realized Sosa’s growth would cause negative consequences, particularly in its IPO.
“So, Spotify targeted Sosa because Spotify got wind from Merlin that Sosa had opted-in to the Merlin-Spotify Deal Renewal dated February 20, 2017, which provided Sosa with a right for an equity share in Spotify proportionate to royalties earned.
“At the rate of Sosa’s growth, Sosa would have received a significant share of Spotify’s equity.”
And the allegations don’t stop there.
“Since May 2017, the date of Spotify’s formal take-down notice, Spotify has continued to reproduce and/or distribute certain of Sosa’s works through its interactive streaming service for which Plaintiffs have received zero compensation,” says the suit. “This conduct is ongoing.”
It adds: “Spotify has streamed Sosa’s Repertoire hundreds of thousands of times without ever entering into a license agreement with Plaintiffs for payment of public performance royalties and/or monetarily compensating Plaintiffs for such exploitation.”
Spotify declined to comment on the lawsuit, which you can read in full through here.
In a press release issued today (November 25), Pro Music Rights confirms it has “filed a lawsuit against Spotify seeking over $1 billion of dollars for distribution to its clients for unfair and deceptive trade practices, unfair competition and copyright violations arising from Spotify’s failure to pay royalties on over 550,000,000 musical streams.”
Jake P. Noch, the Founder and CEO of Pro Music Rights, said: “For years, Spotify has taken advantage of the artists, song writers, composers and publishers represented.
“It is no secret in the industry that, as reflected by the countless lawsuits against Spotify for infringing the
intellectual property rights of hard-working musicians, writers, artists and composers, Spotify cavalierly plays songs without paying royalties.”
Noch continued: “The time to stop Spotify’s utter disregard for U.S. law and the intellectual property rights of Pro Music Rights’ clients is today, and that’s why we have filed the largest federal lawsuit against Spotify in this federal district court.”
Pro Music Rights says it represents approximately 2,000,000 musical works, and estimates its US market share as a PRO at 7.4%. Its clients include rapper OG Maco.Music Business Worldwide