What started as a $150 million class action against Spotify is now threatening to snowball into one of the largest legal fights the music industry has ever witnessed.
Spotify’s attorneys at Mayer Brown LLC are diligently fighting against a massive class action initiated by David Lowery, with infringement claims now potentially surpassing $200 million. But that’s just the beginning: now, a number of rival streaming music services are getting sucked into the tsunami, with multiple class actions and potentially hundreds of millions in additional royalty damages on the way, according to sources.
This is happening, and it’s happening fast. According to confidential information shared with Digital Music News over the weekend, legal paperwork may already be getting drafted against Tidal, Microsoft-owned Xbox Music and Groove Music, Google Play Music, Rhapsody, Slacker, and potentially other on-demand streaming music services, with similar, $150 million damage claims for each.
These expanded legal actions may be announced within the next ten days, and perhaps as early as this upcoming Tuesday, according to sources.
As before, artist activist David Lowery is expected to remain a central figure in the litigation, though others are rapidly piling on. That includes John Emanuel of the obscure band The American Dollar, whose Yesh Music is blazing a legal warpath that has already resulted in an unthinkable settlement with Microsoft (as first reported by DMN). That out-of-court agreement settles claims involving Xbox Music and Groove Music, and could suggest a slam dunk case by Yesh, Lowery and others.
Indeed, Yesh is also taking on Google Play Music on similar grounds, a David vs. Goliath legal scenario to the extreme.
Common to all of these cases is a specific, overlooked publishing license: the mechanical. The antiquated license originally covered ‘mechanical’ reproductions of song compositions onto fixed formats like CDs, LPs, and prior to that, early reproductions like player piano rolls. These days, the license has been wedged into the ‘reproduction’ of temporary files created by music streaming services, a stretch re-definition that is already raising accusations of ‘copyright trolling‘ in DMN comment threads.
Backdated NOIs = Admission of Guilt
The Spotify class action has prompted quick ‘cover your ass’ style reactions from Rhapsody, Microsoft, and Slacker, all of whom have issued backdated NOIs (Notices of Intent) which are the procedural first step for securing a proper mechanical license. The only problem is that these NOIs date back to 2005, according to paperwork shown to Digital Music News, which could demonstrate culpability in the new class action filings.
Content Removals at Rhapsody, Slacker, Deezer
Rhapsody and Slacker (not to mention Spotify US) have also recently ripped down David Lowery’s content, specifically for Cracker and Camper van Beethoven, another potential admission of guilt*. Separately, Deezer has also ripped down Lowery’s content, though the streaming service has a scant presence in the US and will likely not face any litigation given the US-based nature of the mechanical copyright claim.
*Update (Sat Mar 5 8:30 pm PT): Rhapsody now appears to have two Cracker and two Camper van Beethoven albums on its service, which, according to our source, were re-loaded (as of Saturday). We’ll keep tabs on this.
Slacker has also played the retroactive game, though the service is a far smaller fish against belugas like Spotify. Slacker, which is mostly known as a smaller rival to streaming radio giant Pandora, also has an on-demand component.
And what about Pandora itself? The internet radio heavyweight is planning a big on-demand expansion ahead, but is unlikely to be touched by the upcoming litigation. Just last year, Pandora acquired the bankrupted Rdio, though the acquisition itself is subject to certain bankruptcy stipulations. Currently, Rdio is not a live concern and its previous liabilities would not be assumed by Pandora.
Pressure on HFA
HFA, or Harry Fox Agency, may also get dragged into the expanding legal warfare, according to DMN sources. The reason is that there may be negligence surrounding HFA’s handling of NOIs themselves, or failure to properly advise their clients (for example, Rhapsody) on proper procedures. Whether those accusations are reasonable or will hold water in court is another matter entirely, with sources unable to offer any substantive details around this potential side-battle.
Tidal’s Abrupt Response
Then there’s Tidal, which brusquely (and very publicly) dismissed a mechanical lawsuit by Yesh Music as frivolous and an abuse of the legal system. Unfortunately for Tidal, Yesh then quickly settled a massive lawsuit against Microsoft on the very same grounds, suggesting a very ‘non-frivolous’ (and expensive) licensing problem. Tidal still has Cracker and Camper van Beethoven music available, but has reportedly failed to issue NOIs to properly license mechanicals on those catalogs.
Apple Music, YouTube: In the Clear
Apparently Apple Music will not be named in any upcoming litigation, thanks to proper issuance of NOIs and mechanical clearances. According to sources, Apple’s NOI paperwork has a few missing elements, but clearly shows procedural compliance and proper intent to license. Apple Music, which launched in July of 2015, would also face far smaller damages if a licensing problem arose, and could likely settle for a modest fee.
YouTube also appears to have its bases covered, thanks to its in-house mechanical licensing work. Mechanicals have apparently been properly handled by recently acquired Rightsflow, which was purchased for exactly this reason. Those procedures appear markedly different than HFA’s, but acceptable nonetheless. According to information shared with DMN, Rightsflow prefers electronic NOIs, among other methods, and could solidly argue compliance in court.
Stay tuned as more details become available! And as always, you didn’t read this first on Billboard.
Image by Adnan Islam, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).
Rhapsody and Slacker (not to mention Spotify US) have also recently ripped down all of David Lowery’s content, specifically for Cracker and Camper van Beethoven, another potential admission of guilt.
Er, no.
I can still queue up CVB tracks on Rhapsody
You guys are both right, I’m checking back to see if that takedown info was an error, or it’s in process.
Looks like both Cracker and CvB albums are being removed and re-added. Currently, there appear to be two albums from each (I’ve documented that), but according to our source, that’s different than before. We’ll keep an eye on this.
Google in the loop, with their legal machine will brain wash any court and any jury and music and musicians will land in deeper and more stinky SWAMP!
Convert Radio and all STREAMING BUSTARDS to simple discovery based music store!
Only enlighten GOOGLE boys can do it without government help and triple their revenues by accident!
MUSIC is much bigger than digital advertising – Just need smart glasses to see it!
$200B music industry by 2025 is obvious to an imbecile!
“YouTube also appears to have its bases covered, thanks its in-house mechanical licensing work. ”
How so? What about all the tracks – and ENTIRE ALBUMS – uploaded illicitly by users? Why is nothing done about this?
Somebody should do something.
Ok
It’s called ContentID
Rip it down if you don’t want it up there
Absolutely HFA should get sucked in to this as they may be the only entity collecting for mechanicals from Rhapsody. If HFA and Music Reports overlap services, then both are culpable.
The services have no doubt been negligent of their responsibilities of operating a licensed music service but HFA and Music Reports have proven that they are not exactly reliable partners as so much music seems to be void of any mechanical license in the US. It seems that legally the services might have some benefit in placing the blame on HFA and Music Reports as they technically a ‘third party contractor’ who simply didn’t do the job they were paid to do.
all of these lawsuits will only serve to accelerate increased governmental oversight, which will come with its own set of problems
ha ha, old people and IT clowns who somehow magically equate decades and decades of real world music cultures (note plural) with botched and 90s (double diss) IT culture intervention.
“Stay tuned as more details become available! And as always, you didn’t read this first on Billboard.”
LMAO.
RAIN had this 10 days ago and updates have been flowing since. Jus sayin’.
Love RAIN, but no, but I don’t think I read anything about this on RAIN ten days ago.
Still dealing with a behemoth industry in slow motion collapse. Now the tech based reincarnation of record labels is being taken to task for the same old shit, not playing fair with artists.
There is so, SO, much wrong here.
Our erstwhile “authority for people in music” once again showing he really doesn’t understand how pretty much any of this actually works (or is supposed to work).
Error #1:
“Spotify’s attorneys at Mayer Brown LLC are diligently fighting against a massive class action initiated by David Lowery, with infringement claims now potentially surpassing $200 million.”
Nope. It is not a class action. It is an individual lawsuit by David Lowery – and ONLY David Lowery.
They are seeking class certification now (and will have a hard time getting it).
Error #2:
“That includes John Emanuel of the obscure band The American Dollar, whose Yesh Music is blazing a legal warpath that has already resulted in an unthinkable settlement with Microsoft (as first reported by DMN).”
Huh? What about the settlement that is “unthinkable”” You have ABSOLUTELY NO IDEA what the terms of the settlement even were. Seriously, you couldn’t be any more speculative and uninformed.
Error #3:
“Common to all of these cases is a specific, overlooked publishing license: the mechanical.”
Um, the mechanical license is anything but “overlooked.” It is in constant use and is at the center of virtually every record deal, streaming license, Congressional inquiry and discussion about music licensing.
Error #4:
“These days, the license has been wedged into the ‘reproduction’ of temporary files created by music streaming services, a stretch re-definition that is already raising accusations of ‘copyright trolling‘ in DMN comment threads.”
No. The “re-definition” is not what gave rise to the claim of “copyright trolling.” That has NOTHING to do with it The trolling claim was based on the fact that Emanuel supplied his own recordings to Microsoft, and THEN turned around sued them for failure to obtain mechanical licenses for the embodied songs.
Error #5:
“NOIs… (Notices of Intent) which are the procedural first step for securing a proper mechanical license.”
Nope. NOI’s are, in fact, the LAST STEP in procuring a mechanical license. They are a back-stop measure, when the licensee cannot otherwise license the song or find the owner of the song.
Error #6:
“Deezer has also ripped down Lowery’s content, though the streaming service has a scant presence in the US and will likely not face any litigation given the US-based nature of the mechanical copyright claim.”
Again, incorrect. Deezer is active in the U.S. and as such, is subject to the exact same U.S. copyright claims as any other service.
Error #7:
“Apparently Apple Music will not be named in any upcoming litigation, thanks to proper issuance of NOIs and mechanical clearances.”
It is a widespread understanding that Apple didn’t issue any NOIs, having obtained the licenses for Apple Music through direct licenses, since the service provides additional features that can not be licensed through the mechanical, in any event.
Error #8:
“According to sources, Apple’s NOI paperwork has a few missing elements, but clearly shows procedural compliance and proper intent to license.”
Again, Apple Music is a service that is not licensed through Sect. 115 and is not subject to mechanical licensing or the NOI process.
In any event, if they were filing NOI’s for any element of the service, and those have “a few missing elements,” then they are just as defective as any other NOI filings (or non-filings).
Error #9:
” Apple Music, which launched in July of 2015, would also face far smaller damages if a licensing problem arose, and could likely settle for a modest fee.”
Nope. Damages don’t have anything to do with the length that a service is in business. It only has to do with how many works were infringed.
Error #10:
“YouTube also appears to have its bases covered, thanks to its in-house mechanical licensing work. Mechanicals have apparently been properly handled by recently acquired Rightsflow, which was purchased for exactly this reason.”
God, this is moronic.
YouTube is an audio-visual service. As such, they do not need – and in fact CAN NOT obtain – mechanical licenses
It is interesting to note your “Update (Sat Mar 5 8:30 pm PT): Rhapsody now appears to have two Cracker and two Camper van Beethoven albums on its service, which, according to our source, were re-loaded (as of Saturday).”
This would appear to indicate that Rhapsody – and Slacker and Spotify, who have also kept these songs up on the service – have confirmed that they have valid mechanical licenses for them. It is painfully clear that you don’t understand this but, just because David Lowery didn’t receive an NOI does not mean that mechanical licenses weren’t acquired otherwise.
Keep posting reams and reams of mis-information DMN! I’m not sure for how long but, I’ll be here, trying to correct you with actual knowledge, when I can.
Thank you! – The lack of understanding of the writer’s chosen subject matter is staggering. Great to see a reader put things to rights.
Well, well, well, somebody is trying to put a spin on a situation that marks the beginning of a long overdue revolution.
It’s not just that interactive music streaming is a plague that redirects money away from artists, it’s the arrogance and need for dominance that marks their business model.
And there’s no way around it. Mr. Ek and Mr. Parker have clearly been pushing a business model grounded in piracy. Let’ call it what it is, Piracy 2.0. Repeatedly, Mr. Ek has proclaimed that Spotify’s goal is to destroy recorded music sales. He measures Spotify’s success in the decrease of recorded music sales and built a business on the backs of artists, staunchly insisting on keeping Spotify FREE. A model that requires artists to make even less money. A business model that pushes Spotify into further debt.
But being a profitable business was never Spotify’s end game. Tens of Millions of FREE subscribers to validate their business to Wall Street is their plan.
And if it takes destroying the lives and careers of artists to get there, it doesn’t matter…. to them.
Keep the pressure on. Mr. Lowery thank-you for being a courageous and tireless advocate for all of us who love music.
It comes as no surprise that these streaming services didn’t have the professionals in place to comply with long established rules and regulations.
This is funny:
It comes as no surprise that these streaming services didn’t have the professionals in place to comply with long established rules and regulations.
Actually, if you understood one iota of what has happened (and what has ALWAYS happened) here, you would understand that it was actually HFA – the National Music Publishers’ Association’s own licensing agency – that doesn’t have the “professionals in place to comply with long established rules and regulations.”
While it is certainly Spotify’s fault for going to market with every recording they could get, and assuming songwriters and music publishers would be easy to identify and pay, it is clearly the songwriters’ and music publishers’ fault for not being easy to identify and pay.
This is the ongoing debate about Statutory Damages in the U.S. and whether it is appropriate or should be modified.