Court Order Could Force Spotify to Reveal Private Correspondence

Lowery Says Spotify Is Tricking Them Into A Lowball Royalty Settlement
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An activist artist demands transparency in a Spotify case…

Back in December of last year, Spotify faced a lawsuit brought forward by musician David Lowery, frontman of bands Camper Van Beethoven and Cracker.  Lowery, who carries a long history of advocating for fair pay for artists, claimed that Spotify has been distributing copyrighted content while skipping key royalty payments.

Lowery subsequently initiated a class action lawsuit, with estimated damages in the $150 million range.

Since that point, the case has been ongoing, though an agreement involving publishing organization NMPA and Spotify could seriously deflate the action.  But what’s in that agreement, and is it fair?  On Monday (April 18th), Lowery told U.S. District Judge Beverly Reid O’Connell that Spotify is ”using misleading information to push putative class members into a lowball royalty settlement with the National Music Publishers Association,” while pushing for access to the deal points.

Accordingly, Lowery has requested access to review all communications Spotify USA issues to putative class members related to its $30 million settlement with the NMPA, part of a potentially broader subpoena.

Lowery not only claims that Spotify is using the NMPA settlement to cut class members out of his lawsuit, but he also claims that the NMPA has distributed “slanted” press releases that serve to discredit his lawsuit and draw would-be litigants into their settlement.  Lowery is now asking the presiding judge to allow him to send corrective notices to putative class members, and prohibit Spotify and any related parties from issuing any misleading communications moving forward.

Lowery also claims that the streaming platform is infringing upon his and other musicians’ mechanical rights by failing to secure proper licenses.

Separately, Spotify seeks termination of the lawsuit based on technical problems with class action certification.  Specifically, Spotify’s lawyers have argued that each writer and publisher situation is different, which would require individual litigation instead of an across-the-board class action suit.

But, this hasn’t stopped Lowery filing a motion to consolidate his $150 million lawsuit with Mellissa Ferrick’s similar $200 million lawsuit, filed shortly after Lowery’s.  On Monday (April 18th), Lowery also asked a US District Judge to consolidate these lawsuits and appoint his counsel Michelman & Robinson LLP as lead.  The request is in opposition to a similar motion filed by Melissa Ferrick’s counsel Gradstein & Marzano PC.

The motion is below…

11 Responses

  1. GGG

    Just divvy up each user’s money according to who they listened to. Maybe I’m being naive or missing some giant flaw in that system, but seems like it’d solve most issues. Spotify makes the same amount of money per user, artists can, in theory, make more money per stream. The only people I guess it’d hurt would be majors who get the benefit of huge chunks of lesser streamed artists’ money.

    • Troglite

      I believe Spotify is resisting this approach. Amazingly, they even seem to be resisting any resolution that would actually halt the business practices that allowed these works to be played before the mechanical licenses had been acquired. I speculate that their resistance is likely motivated by a desire to avoid a comprehensive audit to determine which works have not been properly licensed and the number of plays for each of those works. Those details could be very damaging to Spotify’s reputation. I also speculate that the costs and delays associated with fundamentally altering this aspect of Spotify’s business practices must be considered to be fairly high within their executive ranks.

      • Lance

        It stems from label’s artist contracts stipulating that if these streaming services constitute a mechanical reproduction of the publishing, then it also means it’s a mechanical reproduction, by a third party, of the master which would put the artist royalty rates likely into the 50% range because of traditional deals with verbage relating to “third party licensees”. See the Eminem lawsuit with Itunes from a few years ago…

        • Troglite

          Ugh.. that actually sounds slightly worse than my original hypothesis. 🙁

    • Greg

      It’s good in theory, but a nightmare to administer in practice. I worked in a streaming company, and once you factor in all the various product offerings (e.g., multi-device / user accounts, radio vs. on-demand, offline playback vs. not, legacy products, etc.), bundles (e.g., carrier deals), free trials, special promotions with unique label deal terms, etc., the reporting gets incredibly complex, and that’s when you’re tracking plays on an aggregate basis. The major label audits would drag on for years and cost hundreds of thousands just to deal with, let alone resolve. Now imagine reporting on the specific (monthly) plays of all of your millions of users. In theory it could be done. In practice it would be total mess.

      And there are still some fairness questions with this approach. If someone pays $9.99 for access to all music, but happens to only stream one song during a particular month, should that artist / composer get the full royalty? Not saying it’s unfair, but reasonable people could disagree.

      • Troglite

        I think you raise some excellent points.

        Corporate Governance 101: Any system that cannot be effectively audited cannot be trusted.

        I think there is reason to believe that the complexity you describe is being used by some bad actors to mask fraudulent or at least ethically questionable practices. So, although I agree with you that the complexity exists.. I am reluctant to accept it as a blanket defense.

        And by the way.. that complexity and many of those bad actors existed long before the term “streaming” become common vernacular.

        • What about Spotify's supposed technoloy?

          I always read articles that have Spotify bragging about their technology and their use of big data and machine learning. You’re telling me they can’t filter through all that data and segment it in an automated process?

  2. David Lowery

    Charlotte. That is a pretty bold and declarative headline. It clearly implies that emails that belong to artists, that is emails artists authored by artists to Spotify would be subject to the court order. Can you show me exactly which paragraph in the document would force that?

    • Paul Resnikoff

      I made the headline. But maybe I misunderstood. Aren’t you trying to ascertain what is being communicated to rights owners and artists about this accord, which you are alleging are misleading?

  3. Dominiqueaniqueanique

    Doesn’t the court paper apply just to communication by NMPA to NMPA members? Who by definition are PUBLISHERS? Why would Spotify or NMPA be communicating to songwriters about a settlement that only applies to publishers? Does the NMPA waiver apply just to the publisher or are they trying to get it to apply to songwriters, too? That’s pretty sneaky. Would this apply to Canadians?

  4. Anonymous

    There needs to be a flat, universal royalty rate per stream, mandated by the government, just like radio is regulated.

    The End.