It’s been a rough year for Spotify so far with two massive class-action lawsuits alleging the company hasn’t licensed or paid for the use of thousands of songs. This issue over mechanical royalties is…complicated to say the least, but the accusations all comes down to this: Spotify is streaming songs that they have no right to. And they’re not paying for those streams, either.
Now that the lawsuits are filed, now what? Musically takes a look:
2016 WAS SUPPOSED TO BE THE YEAR WHEN SPOTIFY REACHED 100M ACTIVE USERS, EN ROUTE TO AN IPO.
The former will happen soon while the latter may still be on the cards this year. But 2016 is now also the year when Spotify faces its biggest existential threat yet: a pair of class-action lawsuits in the US focusing on songwriter royalties
The lawsuits against Spotify were filed by two musicians, David Lowery and Melissa Ferrick, either side of Christmas, with media coverage splashing on the potential damages of $150m and $200m respectively.
It’s important to understand exactly what their claims are about, and especially important to understand that the issues go well beyond Spotify.
The first key point: these lawsuits are not just about unpaid royalties for songs streamed on Spotify. That’s part of it, but the issue is also over the licensing of those songs – or at least one of the two licences on the composition (songwriting) side.
For many people, this story’s public life began in October 2015 with a dispute between Spotify and independent music company Victory Records over mechanical royalties. However, it was actually Lowery who first opened the can of worms in a post on his blog The Trichordist in July.
“The past two years I’ve been trying to figure out how it is that Spotify has legally made available many of the songs that I have published under Camper Van Beethoven Music and Bicycle Spaniard Music,” wrote Lowery.
“In order to make my songs available on their service in the US, Spotify must enter into a direct license with my companies or an assigned agent. OR they must serve an NOI (notice of intent) to take advantage of the statutory compulsory license.
“After two years I find no evidence that they have properly licensed most of the songs that are currently available on the service […] Further I can find no evidence that they paid the US ‘mechanical streaming’ royalty to my companies or my agents.”
Again, this can be pretty arcane for the average music fan, but if you’re interested in how things work behind the scenes, you really should keep reading.
Once you’re done that, move this article, try this summary of affairs.