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Spotify music streaming service slapped with $1.6B lawsuit

Written By | Jan 4, 2018
Spotify meeting.

Spotify CEO Daniel Ek addresses staffers at 2010 Stockholm meeting. (Image via Wikipedia entry on Spotify, CC 2.0 license)

LOS ANGELES, January 4, 2018: Music publisher Wixen Music Publishing Inc. has filed a lawsuit claiming the popular music streaming service Spotify is “streaming millions of unlicensed songs in what it calls massive, systemic copyright infringement,” according to several sources

Wixen represents the rights of songwriters and publishers. The company is seeking $1.6B in damages from the popular streaming service as well as injunctive relief. According to the suit, Spotify failed to get a direct or compulsory license from Wixen permitting the service to reproduce and distribute songs, including “Free Fallin” by Tom Petty and “Light My Fire” by the Doors.

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The lawsuit lists 265 pages of additional songs that Stockholm-based Spotify AB’s internationally popular music service is allegedly streaming without proper licensing and compensation. Wixen further alleges that more than 6 million of Spotify’s songs are improperly licensed, representing about a fifth of its catalog.

Wixen’s suit is in part a response to performers’ and publishers displeasure with a $43 million agreement by Spotify to settle a possible class action, which alleged it failed to pay  royalties for some of the songs it makes available to users. That suit only paid out one-tenth of the revenue that Spotify is claimed to be generating each month from its 60 million paying subscribers.

Wixen alleges that the streaming service doesn’t do enough to identify the rights holders of songs it licenses from music labels, according to its complaint, which states in part:

“Prior to launching in the United States, Spotify attempted to license sound recordings by working with record labels but, in a race to be first to market, made insufficient efforts to collect the required musical composition information and, in turn, failed in many cases to license the compositions embodied within each recording or comply with the requirements of Section 115 of the Copyright Act.”

Spotify has grown into a business currently valued at around $19 billion. The company has also created strong relationships with major music label companies including Warner, Universal, and Sony. However, the vexing issue of issues of copyright and licensing continue to plague the company.

In addition to its legal dispute with Wixen Music Publishing, the streaming service also faces ongoing legal actions filed against it by Bob Gaudio and Bluewater Music Corporation in July 2016. These issues threaten to cloud Spotify’s plans to list its shares publicly via a uniquely non-traditional IPO, as NPR notes:

“The timing of the [Wixen] suit is inauspicious for Spotify — Wednesday it reportedly filed papers with the SEC for an initial listing on the stock exchange some time in the first half of this year.”

Complicating Spotify’s IPO plans further is the way the company plans to list its shares. According to Bloomberg,

“Spotify AB has filed confidentially with the Securities and Exchange Commission to go public via a direct listing, in which it won’t sell shares in an initial public offering but will instead just one day declare that it is public and let anyone who wants to trade its shares. We have talked a few times about this plan — it’s weird — and each time I write about it someone emails to say ‘you forgot to mention that Google did something similar in 2004.'”

— Terry Ponick contributed to this article



Larry Lease

Lawrence Lease is a conservative commentator taking aim at all aspects of governmental domestic and foreign policy. Lease previously served as a volunteer with the human-rights organization International Justice Mission in the Washington, DC metropolitan area. Follow Lease on Twitter, Facebook, and soon Blog Talk Radio.