Spotify is embroiled in new legal objections over how it pays songwriters royalties... or doesn’t, as the songwriters insist.
At issue is the mechanical copyright royalty – the amount owed to the composer or songwriter from the reproduction of the recording. Songwriters and composers argue that while Spotify negotiated licences with record companies, it didn’t bother asking the writers, and didn’t build the infrastructure internally to pay the writers.
Traditionally this was handed off by the record company to the music publisher. But in the streaming era, things have become messy and opaque. As much as 25 per cent of the royalties owed to composers may be missing, according to National Music Publishers' Association (NMPA) president David Israelite.
To cut a long and complicated story short, earlier this year Spotify agreed to settle two class action suits as it cleared the decks for its IPO: an IPO songwriters say will make Spotify executives rich, while failing to pay the people whose work built the business – the people who write the songs. Fresh objections on two fronts this week suggest the deal is far from done.
In a filed objection to one of the proposed class action settlements [Melissa Ferrick et al v Spotify USA Inc et al], hundreds of songwriters – including Black Keys' Dan Auerbach, Pixies founder Kim Deal and Tom Petty – have called foul, calling the $43m agreed settlement “a free pass.”
In this case, the songwriters say that they have to go to great expense to exclude themselves from the class action settlement. In the filing, they argue:
Now in a fresh lawsuit filed this week, Nashville publishers have revived the original charges. Six publishers argue that Spotify’s failure to notify or negotiate amounts to a compulsory license.
Additionally, in a race to be the first to market, Spotify made the deliberate decision to distribute sound recordings without building any internal infrastructure to license compositions properly or comply with the requirements of Section 115 of the Copyright Act.
Spotify did not build proper infrastructure or require sound recording rights holders to provide data as to what specific composition the sound recording embodies.
Prior to launching in the US, Spotify used the Harry Fox Agency to pay writers, but the HFA database was incomplete, the lawsuit alleges – short around 100,000 songwriters and 8 million compositions. The latter case was filed yesterday by six publishers in the District Court of Tennessee, Nashville.
Spotify complains that in the absence of a global repetoire database, paying the writers is very difficult. But in a separate case (yes, there are many) Spotify argued that it didn't have to pay them a penny.
This cuts no ice with David Lowery, the first litigant in the Ferrick et al class action suit. Last week he argued that Spotify could have avoided litigation by asking for the composition metadata from the record companies it needed to pay the writers – and making sure they got it.
“Every record label is required by law to pay the publishers and songwriters. This is known and readily available information by the people who are delivering the recordings to Spotify!” he wrote.
“There is no missing information, and no unknown licenses. Why is this so F’ing hard?”
Spotify declined to comment. ®