Spotify: Head of the Class…Action Lawsuit, That Is

Spotify, the world’s largest streaming service is now facing a $150 million class action lawsuit from over 100 independent artists asserting that it knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without content owners’ permission. David Lowery, a vocal artist rights advocate, is the class representative and they are represented by Michelman & Robinson, LLP. Plaintiffs filed a complaint, December 28, 2015 seeking unpaid royalties for Spotify’s failure to obtain mechanical licenses or their improper licensing schemes. Spotify has a reserve fund containing anywhere between $17 and $25 million of earned royalties that are unmatched to any particular rights holder.

The complaint alleges that Spotify has licensed compositions to hundreds of millions of users without securing the mechanical licenses or otherwise simply failed to locate or identify the owners to distribute their respective ownership shares. Spotify contends that it is committed to paying royalties to its content owners but is adamant about paying it to the correct content owners, holding that the data that is available is often incorrect or incomplete. They claim to be working closely with the National Association of Music Publishers to ensure that the correct owners receive their respective shares. Spotify also claims that they are spending their time, money and resources to invest in a comprehensive publishing system that will solve this issue for the inevitable future.

The complaint alleges anywhere between $750-30,000 per each infringed work, totaling $150 million. The complaint also requests an injunction preventing Spotify from continued infringement and other violations of the California Business & Professions Code §17200. The complaint also requests Spotify to pay for a third party auditor to identify the owners of the works that were used in its services without first obtaining a mechanical license and requires for those works to be removed from its services until the proper licenses are obtained. As far as monetary damages, Lowery is demanding Spotify pay statutory damages, gross profits, compensatory damages (to be determined at trial), restitution on the unlawful proceeds, pre and post judgment interests and attorneys’s fees.

Lowery and its class are not playing any games with Spotify. I think they demanded all relief available under the court of law. I’m surprised they haven’t alleged criminal charges. No one ever really does, they just want the money and an example to be made. I think if these guys started going to jail behind their unlawful acts, they might think twice about committing these acts of infringement. Giving back money that isn’t rightfully yours is one thing; serving some time for 1-5 years in federal prison is another.

Although I’m not sure if I would recommend jail time in this case. I myself have attempted to locate content owners using the available resources to me in order to obtain licenses for music. The problem is there are so many different parties that are involved in a song. You have the producers, engineers, lyricists, composers, artists, publishers, record labels and at times more than one of each of them. It is no easy feat to determine who is wholly responsible for one song. I imagine companies like Spotify have more resources at their disposal than little old me, but I also imagine they encounter the same problems on their level as well. And Spotify at least has a reserve where the money is safely tucked away when they do find these content owners. That shows some good faith on their part. I wonder if the owners demanded their money from Spotify before going to court. Content owners know what they created. There are way more rights holders than there are “Spotify’s”, so if you hear you stuff being played, go get your check. If you’re getting the run around, that’s one thing, but if you’re going straight to court, that’s another. Don’t get me wrong, I know there are a lot of services out here making a good living off of illegally obtained music, but all of them aren’t. Some are just trying to find the balance between providing a service to the public and paying the proper individuals for their works. Imagine if Spotify was sending out checks to only one of the right parties when there were three involved. How much of a headache would that be for them? No one is returning money given to them by mistake. Spotify would be forced to use its resources on collection efforts just to get the right people their money after giving it all to the wrong ones and that could be a legal and administrative nightmare. Nobody really wins in that situation.

BUT WAIT! It doesn’t end there. Spotify was hit with yet another class action lawsuit this week, led by Meliss Ferrick, represented by Gradstein & Marzano. The accusations are pretty much the same – copyright infringement, failure to obtain mechanical licenses, failure to pay royalties and Spotify stands in the same position it did two weeks ago when Lowery hit them. They are trying to work it out. I’m curious to know why Ferrick and her crew didn’t just join Lowery’s class, guess she wanted her name out there too. Maybe the judge will consolidate them anyway, unless the issues presented are different, which it doesn’t sound like it. Well Spotify…God speed.