Spotify Hit With $150 Million Class Action Over Unpaid Royalties

Getty Images
Spotify CEO Daniel Ek

According to sources, Spotify has created a $17 million to $25 million reserve fund to pay royalties for pending and unmatched song use.

Camper Van Beethoven and Cracker frontman David Lowery, retaining the law firm of Michelman & Robinson LLP, has filed a class action lawsuit seeking at least $150 million in damages against Spotify, alleging it knowingly, willingly and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.

The lawsuit comes amid ongoing settlement negotiations between Spotify and the National Music Publishers Association over the alleged use of allowing users to play music that hasn’t been properly licensed, and also without making mechanical royalty payments to music publishers and songwriters. According to sources, Spotify has created a $17 million to $25 million reserve fund to pay royalties for pending and unmatched song use.

The lawsuit was filed on Dec. 28 in the Central District Court of California. According to the complaint, Spotify has unlawfully distributed copyrighted music compositions to more than 75 million users but failed to identify or locate the owners of those compositions for payment, and did not issue a notice of intent to employ a compulsory license.

The complaint states that Spotify has "publicly" admitted its failure to obtain licenses and created a reserve fund of millions of dollars for royalty payments which have been "wrongfully withheld from artists." The use of songs not lawfully licensed "creates substantial harm and injury to the copyright holders, and diminishes the integrity of the works," the complaint states.

The songs alleged to have been Illegally reproduced and/or distributed by Spotify include "Almond Grove" (copyright registration No. PAu003764032); "Get On Down the Road" (No. PAu003745342); "King of Bakersfield" (No. PAu003745341); and "Tonight I Cross the Border" (No. PAu003745338), according to the complaint.

The complaint further notes that statutory penalties allow for judgments between $750 and $30,000 for each infringed work and up to $150,000 per song for willful infringement.

The complaint claims the lawsuit qualifies as a class action because there is a well-defined community of interest in the litigation and that members of the proposed class, which will exceed 100 members, can be easily identified via discovery from Spotify's database files and records. A class action is more efficient than letting the courts be burdened with individual litigation, if every member of the class could afford to pursue action (which is highly unlikely). Class actions conserve the resources of the parties and the court system and protect the rights of each member of the class.

In addition to entering an order appointing Lowery as the class representative and the plaintiff's counsel as class counsel, the complaint asks the court to enjoin Spotify from continued copyright infringement; from further violations of California Business & Professions Code § 17200; injunctive relief that requires Spotify to pay for the services of a third party auditor to identify the works reproduced and distributed by Spotify without first obtaining a mechanical license; and requires Spotify to remove all such works from its services until it obtains the proper licenses.

Lowery, who also teaches at the University of Georgia, and the class seek restitution on Spotify's unlawful proceeds, including defendants' gross profits; for compensatory damages in an amount to be ascertained at trial; statutory damages for all penalties authorized by the Copyright Act; reasonable attorneys' fees and cost; and pre-and post judgment interest on monetary awards.

This article first appeared on Billboard.com

comments powered by Disqus