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3 January 2018Copyright

Spotify sued for $1.6bn over copyright infringement

Copyright administration and publishing company Wixen Music Publishing has filed a claim against content streaming service Spotify for copyright infringement.

The lawsuit was filed in the US District Court for the Central District of California, Western Division, on Friday, December 29, 2017.

Independent music publisher Wixen has administered more than 50,000 songs written by its 2,000 clients, and is the exclusive licensee of songs by artists such as Tom Petty, Neil Young, and The Doors.

Spotify, a startup originally launched in 2008 in Stockholm, is now a multibillion dollar streaming service used by 140 million people worldwide. It pays copyright holders for streamed music based on a proportion of total songs streamed.

Wixen alleged that thousands of its songs have been used by Spotify without the appropriate licence. Spotify has deals with record labels regarding the sound recording copyright in music, but Wixen claimed that Spotify failed to obtain the equivalent rights for the compositions.

The publisher claimed that around 21% of Spotify’s 30 million songs may be unlicensed and that Spotify itself has admitted infringing copyright on many occasions.

The claim stated: “As Spotify has recently admitted, and as recent lawsuits and settlements confirm, Spotify has repeatedly failed to obtain necessary statutory, or ‘mechanical,’ licences to produce and/or distribute musical compositions on its service.

“Consequently, while Spotify has become a multibillion dollar company, songwriters and their publishers, such as Wixen, have not been able to fairly and rightfully share in Spotify’s success, as Spotify has in many cases used their music without a licence and without compensation,” the lawsuit continued.

Although Spotify does pay royalties to the rights holders of songs streamed on the platform, the company has previously faced criticism from artists such as Taylor Swift for not fairly compensating the creators of the musical content.

Benjamin Semel, partner at Pryor Cashman, said: "This lawsuit speaks to the risk for music services like Spotify of a strategy to seek forgiveness rather than permission."

He went on to note that US copyright law provides music services with the ability to compel songwriters and publishers to license their songs, while also setting out a specific process that must be followed to compel such a licence.

Semel continued: "Failure to follow the process in good faith (or negotiate a direct licence) can leave a music service like Spotify asking for forgiveness from an awful lot of people."

In May 2017 the streaming service proposed a $43 million settlement in a putative class action led by David Lowery and Melissa Ferrick. The lawsuit, which involved songwriters and publishers, claimed that Spotify had not sufficiently paid for the mechanical licences of the musical compositions.

It was hoped that the proposed settlement fund would compensate rights holders for past infringement, but Wixen said the proposal “does not adequately compensate Wixen or the songwriters it represents”.

Wixen filed the claim following the introduction of the Music Modernization Act in December 2017. The legislation is intended to simplify digital licensing and increase royalty payments in the US, but it also affects copyright claims for mechanical reproduction.

Randall Wixen, president of Wixen, explained at the time of filing: “These services will retroactively get a free pass for actions that were previously illegal unless we actually file suit before January 1, 2018.”

Wixen is seeking at least $1.6 billion in damages, which equates to $150,000 per song for more than 10,000 songs, as well as injunctive relief to include “requiring Spotify to develop and implement procedures for identifying and properly licensing songs”, according to the claim.

Despite this, Simon Ewing, senior associate at Russell-Cooke, believes that “given the size of Spotify’s operation and the use of streaming services generally around the world, it seems unlikely that this dispute in itself will lead to a sea change in the way IP rights are used in the creative industries”.

A Spotify spokesperson declined to comment.

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24 May 2018   A US judge has rubber-stamped a settlement agreement, including a $43.45 million cash payment, in a class action lawsuit filed against Spotify for copyright infringement.
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21 December 2018   Spotify has settled a copyright infringement suit with independent music publisher Wixen.
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