Sketchy Document Surfaces In Spotify’s $150 Million Lawsuit

Spotify Letter on Lowery

Earlier this week, Spotify’s high-priced lawyers pointed their guns at David Lowery, the artist activist who started a class action now valued north of $200 million.  The legal attack attempted to nullify Lowery’s aggressive class action entirely, based on technical issues that had nothing to do with the core claim.

But what is that core claim?  Lowery’s lawsuit was predicated around Spotify’s failure to pay specific mechanical licenses, an issue that specifically relates to the licensing of publishing assets (ie, the underlying composition instead of the recording itself).  But according to correspondence leaked to Digital Music News late Thursday evening, Spotify’s lawyers reached out to Warner Music Group’s attorneys in December claiming that Lowery had raised broader issues that included the recording side.

Those broad claims triggered a clause in Spotify’s contract with Warner Music, including the right to remove the content as needed.  “We are writing to inform you that we received a demand letter from David Lowery and Camper van Beethoven (collectively, the “Artist“),” the letter states.  “Among other things, the Artist asserts that his exclusive rights to copyrights in musical works and/or sound recordings have been infringed by Spotify’s exploitation of the applicable musical work and/or copyright.”

A footnote in the letter then suggests that Lowery may have issued a broad-reaching demand, without specifying the licenses infringed.  “The artist did not identify whether he is seeking a publishing or sound recording claim for each work, so we have listed all of the affected Warner tracks.”

Alternatively, the letter could be deliberately misrepresenting the claims made by Lowery to Warner Music, a move that would could constitute tortious business interference (among other issues).  Indeed, the listed tracks have indeed been removed from Spotify, at least in the US, based on a check late Thursday evening.

Both Lowery and Spotify have been contacted for comment on the correspondence.  The full letter follows.

 

12 Responses

  1. Me

    Am I missing something here? This letter doesn’t seem to do anything more than serve as a notice to Warner that they may be removing the album at least until the conflict is resolved. This is pretty standard when it comes to conflict claims. Do you have any evidence that Spotify is “deliberately misrepresenting the claims made by Lowery?” If not, this is pretty poor journalism – if not straight out a case of yellow journalism.

    Reply
    • Anonymous

      that’s all it is. nothing sketchy, just more click bait content from DMN that’s we’ve fallen for and “engaged” with.

      Reply
      • Name2

        I liked that DMN put “high-priced lawyers” in the opening sentence. I presume Lowery, OTOH, called Saul?

        Reply
  2. What Did You Expect?

    Ha!!!!

    “the letter could be deliberately misrepresenting the claims made by Lowery to Warner Music, a move that would could constitute tortious business interference (among other issues). “

    Jesus Paul. You obviously don’t know much about the music business – and you know even less about the law. Why do you insist on continuously proving your ignorance by posting dribble like this?

    Why would you suggest that Spotify’s letter is in any way, misleading?

    They have a CONTRACTUAL OBLIGATION to tell WMG about any claims arising out of the license of the Warner catalog of tracks. Do you REALLY not get that?

    It even refers to that contractual obligation, in a stand-alone paragraph – right in the letter you reprinted:

    In accordance with Clause 13 of the agreement, this letter serves as written notice of the claim of Spotify.

    On what earthly basis do you make the argument that Spotify, notifying WMG of the claim, as Spotify is obligated to do, constitutes ANY type of “tortious business interference”?!?!?!?!

    Seriously. You really need to learn when not to wade out of your depth.

    As I posted in response to your original celebration of this claim, it is going to be interesting to see if WMG provided an indemnification or representation that the publishing on these CVB tracks was available.

    It’s still early, but thus far, this is shaping up to be a classic case where Lowery’s label will be brought in, as they have a mechanical license from Lowery and go on to license the masters to Spotify and and typically provide at least a representation that the publishing is available (if not a full indemnification for publishing claims).

    Reply
    • Maritime Law

      “It’s still early, but thus far, this is shaping up to be a classic case where Lowery’s label will be brought in, as they have a mechanical license from Lowery and go on to license the masters to Spotify and and typically provide at least a representation that the publishing is available (if not a full indemnification for publishing claims).”

      I’m gonna defend Paul here. Your comment supposes that Lowery’s labels have mechanical licenses that they “pass through” to Spotify.

      1. Clearly Lowery and his attorneys would have to have access to that contract. Lowery has to be a party to that document as he clearly owns those song rights. You think a firm like Michelson and Robinson is gonna take on a contingency class action against a Goldman Sachs backed company without checking the recording contracts first? That’s a $10 Million dollar mistake.

      2. If you look at his blog on July 20th 2015 “http://thetrichordist.com/2015/07/20/spotifys-failure-to-license-my-songs-in-us-illustrates-rethink-musics-call-for-transparency/” Lowery lists the songs. I noticed something right away. These songs do not include Cracker songs from his Virgin albums. In other words the UMG distributed hits. That’s significant. I would say this is pretty good evidence they checked, didn’t like what they saw in that contract and left those songs out. It does include Camper Van Beethoven songs distributed by Virgin/UMG that presumably fall under recording contracts from the 1980s. Before there was a mechanical streaming right to hypothetically pass through. Are you saying that Spotify or UMG has a time machine? One rationale for creating a compulsory license for streaming compositions was to eliminate the burden of going back and getting these licenses.

      3. Not necessarily a concern here but worth noting: Record labels can’t grant Spotify a pass through license on a cover. How does a label obtain such a license from an outside writer? Why would an outside writer reliably give it to them?

      4. If Spotify has “pass through” licenses from labels and distributors why on earth did they hire HFA to get these licenses again?

      5. If there are pass through licenses why do they admit they do not know who to pay? Just pay the labels.

      6. You are correct that there clearly is some sort of indemnity here with the record labels, but it’s for the sound recordings! Not the compositions. That letter is carefully ambiguous on whether it is a sound recording or composition. Hence the repeated “and/or.” This leads us all the way back to contract interference. IF-and this is a big IF- they knew lowery was referring to compositions but they chose to make it seem like it could include sound recordings. This potentially could cause ADA to pull Lowery’s music from ALL SERVICES and even physical retail. That’s the contract interference. Not saying they did that. Just saying Paul is not off the mark here.

      7. Your comments sound an awful lot like the HFA representative(s) that spoke at this conference back in January: “http://copyrightandtechnology.com/conference/“ Were you there?

      Reply
    • What Did You Expect?

      You might want to stick to your namesake, Maritime Law.

      Your response if littered with errors and misinterpretations. Let’s go through some of them:

      “I’m gonna defend Paul here. Your comment supposes that Lowery’s labels have mechanical licenses that they “pass through” to Spotify.”

      No. My comment doesn’t suppose that. AT ALL.

      Indeed, I was very explicit in referring to the typical provision of “at least a representation that the publishing is available, if not a full indemnification for publishing claims.”

      Nevertheless, for some reason (perhaps because it appears to be the argument you clearly want to have), you’ve chosen to simply re-interpret that very specific statement and argue (incorrectly) against a “pass through” license. Something that was never mentioned, and never even hinted at.

      “1. Clearly Lowery and his attorneys would have to have access to that contract. Lowery has to be a party to that document as he clearly owns those song rights. You think a firm like Michelson and Robinson is gonna take on a contingency class action against a Goldman Sachs backed company without checking the recording contracts first? That’s a $10 Million dollar mistake.”

      Apparently, you haven’t been around the music business very long. Mistakes like this are made, routinely.

      Just as a recent example: Do you think that Warner/Chappell and their lawyers, Munger Tolles & Olson, would try to claim that “Happy Birthday” was a validly copyrighted work that they owned the rights to, without being sure of it? That was a (minimum) $14 million mistake. Ooops!

      “One rationale for creating a compulsory license for streaming compositions was to eliminate the burden of going back and getting these licenses.”

      I have no idea what you are talking about, here. Where/when do you think a “compulsory license for streaming compositions” was “created”?

      There is a compulsory license to make and distribute phonorecords, including digital phonorecords, in Sect. 115 of the copyright act. There is no compulsory license for “streaming compositions.” There is a settlement, that includes certain streaming activities, to be treated as Sect. 115 compulsory licenses, but I’m pretty sure there is no compulsory license for “streaming compositions.”

      Similarly, I have no idea what point you are trying to make with respect to Cracker songs from Lowery’s Virgin albums vs. Camper Van Beethoven songs distributed by Virgin/UMG – or your reference to “the time before there was a mechanical streaming right to hypothetically pass through.”

      “3. Not necessarily a concern here but worth noting: Record labels can’t grant Spotify a pass through license on a cover. How does a label obtain such a license from an outside writer? Why would an outside writer reliably give it to them?”

      In these three questions, you truly indicate your limited understanding of the issue.

      1) Labels absolutely CAN grant digital distributors a pass-through mechanical license – for ANY work that has been validly previously distributed – even a cover. See, Sect 115 (c)(3)(a).

      2) Record labels “obtain” a compulsory license from ANY writer – “outside” or signed – through Sec 115. It’s called a compulsory license, for a really good reason. Because it available compulsorily. No permission needed.

      3) Again, it is a compulsory license so, no “outside writer” HAS to give it to them, “reliably,” or not.

      Do you understand what a compulsory license is?

      “4. If Spotify has “pass through” licenses from labels and distributors why on earth did they hire HFA to get these licenses again?”

      Again, I never said – nor even implied – that Spotify has a pass through license here. What I suggested is that it is typical for record labels to represent that the publishing is available and, in some cases, to even indemnify against publishing claims.

      Can you actually see which windmill you’re tilting at, here?

      “5. If there are pass through licenses why do they admit they do not know who to pay? Just pay the labels.”

      Again…. Who said a pass-though mechanical license was granted here?

      “6. You are correct that there clearly is some sort of indemnity here with the record labels, but it’s for the sound recordings! Not the compositions.”

      Well thanks for saying a I was right….. ….about that I wasn’t saying!

      No. I know there would be an indemnification as to the sound recordings. That’s the labels’ very own property, that they are licensing, directly.

      We don’t know if there was an indemnification of the sort I was suggesting, for the publishing, since that right is remote. I know indemnifications for related publishing exist in some sound recording license agreements, and they have been successfully invoked, by digital services. I don’t know if one exists here. Even if there is just a representation that publishing will be available though, that is likely enough to drag the record company in.

      No, I didn’t attend the NYU Copyright and Technology Conference.

      Reply

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