Spotify facing $1.6bn copyright lawsuit from major music publisher

3 Jan 2018351 Views

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Spotify app installation screen on mobile. Image: Pe3k/Shutterstock

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Spotify faces the wrath of a major music publisher for failing to obtain the proper licences for compositions.

Swedish music streaming giant Spotify is being sued by Wixen Music Publishing, a firm that handles titles by many major songwriters and artists.

According to the suit filed on 29 December 2017, Wixen alleges that Spotify is using thousands of songs without the correct licence. Wixen is seeking injunctive relief as well as damages worth at least $1.6bn, according to The Hollywood Reporter.

Wixen and Spotify at loggerheads

Wixen said Spotify did not obtain a direct or compulsory licence, which would allow it to reproduce and distribute songs, including Free Fallin’ by Tom Petty and Light My Fire by The Doors.

It said that, prior to launching in the US, Spotify had come to agreements with major labels in terms of obtaining the sound-recording copyrights in songs but failed to “obtain the equivalent rights for compositions”. Wixen also said that “in the race to be first to market, [Spotify] made insufficient efforts to collect the required musical composition information”.

It added: “As a result, Spotify has built a billion-dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licences.”

The music publishing firm also accused Spotify of outsourcing its work to a third party, the Harry Fox Agency. Wixen maintains that the Harry Fox Agency was “ill-equipped to obtain all the necessary mechanical licences”.

Songwriters found proposal to be lacking

In May 2017, Spotify proposed a $43m settlement with songwriters and publishers to try and resolve any claims that the firm hadn’t paid proper mechanical licences for song compositions.

A group of musicians, including Sonic Youth’s Kim Gordon and country star Kenny Rogers, described the settlement agreement as “procedurally and substantively unfair to settlement class members because it prevents meaningful participation by rights-holders and offers them an unfair dollar amount in light of Spotify’s ongoing, wilful copyright infringement of their work”.

This lawsuit from Wixen comes as Spotify is gearing up to go public at some stage in 2018, making several deals with major labels to solidify relationships before taking the leap. The same day the lawsuit was filed, Spotify also filed with the court, alleging that Wixen had not given its clients enough time to opt out of being included in the proceedings.

Wixen president Randall Wixen told Variety: “We are not looking for a ridiculous punitive payment. But we estimate that our clients account for somewhere between 1pc and 5pc of the music these services distribute.

“Spotify has more than $3bn in annual revenue and pays outrageous annual salaries to its executives and millions per month for ultra-luxurious office space in various cities. All we’re asking for is for them to reasonably compensate our clients by sharing a minuscule amount of the revenue they take in with the creators of the product they sell.”

Spotify app installation screen on mobile. Image: Pe3k/Shutterstock

Ellen Tannam is a writer covering all manner of business and tech subjects

editorial@siliconrepublic.com