Spotify Faces $365 Million In New Copyright Infringement Claims

Spotify Finally Finds a Way to Secure Licensing Deals and Go Public

Jon Aslund (CC by 2.0)

Spotify has just been slapped with two lawsuits from independent music publishers totaling $365 million.  Meanwhile, the threat of a major publishing lawsuit is dangling.  How’s your day going so far?

When it rains, it tsunamis.  

Spotify has just been served with another raft of publishing lawsuits, according to legal paperwork shared with Digital Music News.  The development could spell the beginning of a fresh avalanche of publishing litigation.

The latest suits are coming from independent publishers Bluewater Music Services and Bob Gaudio.  The Nashville-based Bluewater oversees a vast collection of copyrights; Gaudio is a prolific songwriter behind Frankie Valli and the Four Seasons.

The complaints both involve the same matter: failure to license and pay mechanical licenses.

Both publishers are being represented by eagle Richard S. Busch of the Nashville law firm of King & Ballow.  We can also confirm that Jeff Price of SOCAN is playing a key role in this litigation.

Fun fact: Gaudio is the co-writer behind ‘December, 1963 (Oh What a Night),’ performed by Valli.  That classic has racked up 58 million streams on Spotify.  But that’s just the tip of the iceberg: according to calculations shared with King & Ballow, total damages could reach $365 million.

The math is devastatingly simple:

$150,000 per work infringed  x  approximately 2,434 songs = $365 million.

This has been an extreme migraine for Spotify since late 2015, when cage-rattler David Lowery first raised the oversight.  Since that point, Spotify has been struggling with multiple class actions and back-payments potentially surpassing $70 million.

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Independent songwriters eventually consolidated into a class action with penalties surpassing $40 million.  Separately, major publishing collective NMPA settled with a $30 million resolution.  But mega-publishers reportedly feel cheated by the low-rent deal.  All of which means some potentially major (publisher) litigation ahead.

So add these guys to the tab?

Pile-ons are always fun, and both Bluewater and Gaudio have some serious copyrights in their stable.  Bluewater’s list of infringed includes tracks from Miranda Lambert, Kenny Chesney, Willie Nelson, and even Guns n’ Roses.

Jay-Z Tells Spotify Where to Stuff His New Album

“Infringe now and ask questions later.”

Busch blasted Spotify for sneakily skipping the critical mechanical.  “Songwriters and publishers should not have to work this hard to get paid, or have their life work properly licensed.  Companies should not be allowed to build businesses on the concept of infringe now and ask questions later.”

Jeff Price, a deeply feared pitbull in the space, contacted Digital Music News.  “Spotify raised over $2.5 billion in private equity and venture capital,” Price relayed.  “I don’t understand why they didn’t invest some of that into building the required systems to resolve the issues or do it correctly to begin with.”

“It’s not a confusing requirement; if you want to use someone else’s music to build your business, get a license and then pay for that use.”

Here’s the pertinent paperwork.

First up: Bluewater.

Four Seasons.

And for the complete tranche of documents (including all Exhibits), here’s Bluewater and here’s Four Seasons.

More as this develops!

11 Responses

  1. Avatar
    Anon

    My guess is that Spotify calculates their entire mechanical obligation every month, pays out what they know, and holds the balance waiting to determine who should get it. This lawsuit sounds like a play for Jeff Price to offer his services to Spotify. Otherwise, couldn’t Bluewater and Gaudio just audit Spotify and collect their unpaid royalties (with interest)?

    Reply
  2. Avatar
    bad troll

    Paul, please make a dark future article. Streaming exploded, what about if most of these services fail in the future ,at some point.. what happens then?
    I see the only ones remaining for sure as Apple, Google and Microsoft, the only ones that can afford to stay. Tidal, Spotify and the others will be gone sooner or later, just like soundcloud. Kinda lulz. Who will pay for Jay Z kid’s toys and milk when Tidal makes him bankrupt?

    Reply
  3. Avatar
    Jim

    The math is devastatingly simple:

    $150,000 per work infringed x approximately 2,434 songs = $365 million.

    *******

    Ok, on a somewhat slightly related matter.

    I’m very interested in that $150,000 per work infringed. You get every single songwriter who didn’t get paid appropriately, and you gather not a paltry 2,434, but times 100. Get 243,000 songs. Class action suit. Now you’re talking real money. 365 Million dollars seems like a lot. 36 Billion Dollars most definitely is a crushing amount of money.

    And here’s the thing. The way the laws are written, apparently Spotify is guilty of this crime, and it’s a crime, it’s a violation of the law, Willful Infringement I believe it is. And Spotify is guilty, if every song that didn’t get the money = $150K for willful infringement, that adds up. There are a lot of songs. I’d structure a non-profit to be the new owners of Spotify.

    But, I’m guessing this is not going to happen. Spotify will not be transferred to its new songwriter owners. That 150K per song for Willful Infringement is crazy high. It’s bad law and should be changed. In this case, it’s songwriters going after Spotify. But on the streets of the local towns all over the country, ASCAP and BMI are going after venues, acting like a protection racket, asking for so much money from these venues that they’re closing down. They’re doing this to venues near me. I don’t like it. And ASCAP and BMI are using that same, brutal, $150K to either force venues to close (that’s what typically happens) or to get these venues to pay some ridiculous amount (these are rural places that are typically empty, rural = space is cheap, and ASCAP and BMI determine rates by square footage, which automatically overcharges rural areas. Because of ASCAP and BMI, rural places suck more than they ordinarily would.) Venues close.

    All the laws that I’ve seen regarding this do suck. How about this one? Every radio station in a market of a given minimum size pays the same amount? The big radio station in NYC that reaches 10x the number of listeners as a radio station in Albany, NY pays the same. But the NYC radio station is getting paid a lot more for commercials than the Albany station.

    Everyone should pay the same. There should be a master database of everything and every songwriter should be paid the same. You don’t collect money from the open mic where they’re playing Brown Eyed Girl and pay the writer of Wild Thoughts but that’s what ASCAP and BMI do. Every one of these laws is designed to concentrate power and money in the hands of the few. Very bad laws.

    WBMP played “Wild Thoughts” 137 times in the last week, 3.5738 Million listens 3,573,800. How much does WBMP pay? As I understand it, it’s $6 a spin. 137 spins – $822. 3,573,800 listens. How much per listen?

    $8 – 35K listens.
    80 cents – 3.5K listens.
    8 cents – 357 listens.
    .8 cents – 35 listens.
    .08 cents – 3.5 listens.
    .022 cents – 1 listen.

    these numbers are worse than Spotify and worse than Youtube, and much much worse than these protection racketeers are trying to shake down venues for.

    The technology to measure listeners is there, the ability to instantly transmit the information is there. They all should pay the same. How much per listen? Venues tell ASCAP and BMI (or just enter the data in the database) what songs were played and how many people were there. the right songwriters get paid the right amount. If they play Brown Eyed Girl at an open mic, Van Morrison gets paid. And listeners are listeners. Radio and Spotify and Youtube and all them should be paying the same and that includes venues. Venues can pay the acts directly if the acts are playing originals. There could be a chart that contains streams, radio, and venues, based on listens, the size of the audience. And that applies everywhere. radio, venues, spotify, youtube. And performers on the radio should be paid. That, too, will be uniform, except for the fact that venues are already directly paying performers. But if Spotify and Youtube are paying performers, so should radio. They’re all the same.

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  4. Avatar
    Lest it be overlooked...

    Since the DMN readership is still awaiting a response from Spotify, perhaps when Spotify does respond, it will also respond to this:

    Forget About Fake Artists – It’s Time To Talk About Fake Streams: https://www.musicbusinessworldwide.com/forget-about-fake-artists-its-time-to-talk-about-fake-streams/

    Obviously, full disclosure of this matter and others will have to be made by Spotify (and its partners in equity, I believe) PRIOR to an IPO. On the other hand, whether or not an IPO is pursued, I do believe that the matter of purchasing fake plays from a service such as Streamify would have to be addressed in that, for example, if it were found that a major label or labels had in fact purchased fake plays to promote its recording artists on Spotify (or even Vevo for that matter), it stands to reason that if such is the case the overall numbers were “fluffed” and the perceived “success” of Spotify could have been skewed thereby misleading investors as to the actual popularity of Spotify (not to mention, but I do, as it relates to paid subscriptions to the service)?

    Who wants to pay their hard-earned cash to subscribe to an “unpopular” music or video-streaming service (especially those millennials, lol) if there is really a more popular option and whether or not “popularity” is a factor in that decision-making process, it does seem to be rather relevant information for the consumer when making their decision as to which music or video-streaming subscription to purchase, or not to purchase as the case may be (perhaps a free ad-supported streaming service is to be preferred). Is the consumer purchasing a subscription to Spotify because of the perceived popularity genuinely deserved by virtue of its high distribution numbers legitimately obtained, or otherwise as a result of mega-play purchases from services such as Streamify?

    And how does the popularity of playlists (as well as the individual songs included within those playlists) factor into such an analysis – what of the costs relative to song inclusion in Spotify playlists, “playola” or otherwise? I believe, and it is reported that a “cottage industry” has arisen around song inclusion in Spotify playlists. What if a DIY artist, for example, paid a substantial amount of cash money to have their songs included in popular Spotify playlists only to learn that those Spotify playlists were not really that popular, but rather, playlists composed of “Streamified songs” included within “Streamified playlists,” and further, that the “Streamified playlists” followings are actually comprised of bots!!!

    How To Get Music In Spotify Playlists: https://www.digitalmusicnews.com/2017/06/21/spotify-playlists/

    The Secret Lives Of Playlists: https://watt.cashmusic.org/writing/thesecretlivesofplaylists

    See also, Spotify Will Test Pay-to-Play Song Placement on User Playlists: http://www.spin.com/2017/06/spotify-paid-playlist-placement-payola-record-labels/

    As it is expected that Spotify will be issuing a response to the matter of the current lawsuits in the very near future (as well as the matter concerning playlists of fake plays and bot followings – why not, right?), it may be more appropriate to await that response before further speculation – or not.

    As an aside, I could not help but wonder given the traction that the “fake artists” story gained that the matter of the “fake plays” received almost none – go figure.

    Reply
    • Avatar
      Lest it be overlooked...

      Furthermore, how does the very real possibility that fake plays may be present in Spotify on-demand audio stream counts (or even Vevo on-demand video stream counts for that matter) affect, for example, the RIAA’s Single and Album Awards?

      The RIAA recognizes the below listed Single and Album Award tiers:

      Gold – 5000,000 Units
      Platinum – 1,000,000 Units
      Multi-Platinum – 2,000,000 Units (increments of 1,000,000 thereafter)
      Diamond – 10,000,000 Units (increments of 1,000,000 thereafter)

      Units are defined for the RIAA Single Award tier, in pertinent part, as follows:

      “150 on-demand audio and/or video streams will count as one Unit for certification purposes[.]”

      Units are defined for the RIAA Album Award tier, in pertinent part, as follows:

      “1,500 on-demand audio and/or video streams from the album count as 1 Unit for certification purposes[.]”

      The RIAA states that they take certification very seriously and that they have a third party auditing firm, so as the RIAA claims that they take certification very seriously, I believe it is very reasonable and indeed necessary for the RIAA to conduct, at the very least, a third party audit of all on-demand audio and/or video streams counted in RIAA Award certifications if only for the purpose of protecting the integrity of the RIAA Song and Award certifications.

      CERTIFICATION CRITERIA – RIAA: https://www.riaa.com/gold-platinum/certification-criteria/

      That is not to suggest however that that be the only organization to conduct such an audit as there are other numerous awards presented to various songwriters and artists as well as song and album placements on top single, album and artist charts.
      I believe Billboard and Neilsen may also be companies that utilize on-demand audio and/or video stream counts for analytical and/or award purposes and would therefore be concerned that the data may be tainted by fake plays and may for that reason want to undertake an audit to ensure the integrity of their data as well.

      For the sake of brevity, suffice it to say, I do believe this is a very serious matter. I mean we can’t have Rihanna, Taylor Swift and others walking around with “fugazis” now can we?

      Reply
  5. Avatar
    Lest it be overlooked...

    Furthermore, how does the very real possibility that fake plays may be present in Spotify on-demand audio stream counts (or even Vevo on-demand video stream counts for that matter) affect, for example, the RIAA’s Single and Album Awards?

    The RIAA recognizes the below listed Single and Album Award tiers:

    Gold – 500,000 Units
    Platinum – 1,000,000 Units
    Multi-Platinum – 2,000,000 Units (increments of 1,000,000 thereafter)
    Diamond – 10,000,000 Units (increments of 1,000,000 thereafter)

    Units are defined for the RIAA Single Award tier, in pertinent part, as follows:

    “150 on-demand audio and/or video streams will count as one Unit for certification purposes[.]”

    Units are defined for the RIAA Album Award tier, in pertinent part, as follows:

    “1,500 on-demand audio and/or video streams from the album count as 1 Unit for certification purposes[.]”

    The RIAA states that they take certification very seriously and that they have a third party auditing firm for that purpose; therefore, as the RIAA claims that they take certification very seriously, I believe it is reasonable and indeed necessary for the RIAA to conduct a third party audit of all on-demand audio and/or video streams counted in the RIAA Award certifications in order to preserve the integrity of the RIAA Song and Album Awards.

    CERTIFICATION CRITERIA – RIAA: https://www.riaa.com/gold-platinum/certification-criteria/

    That is not to suggest however that the RIAA should be the only organization to conduct such an audit as there are other awards presented to various songwriters and artists as well as song and album placements in top single, album and artist charts.

    Billboard and Nielsen, for example, utilize on-demand audio and/or video stream counts for purposes such as award and chart placement and would therefore be understandably concerned that the data may be tainted by fake plays.

    For the sake of brevity, suffice it to say, as reported in the above referenced Music Business World article, that “$2,250 will buy you 2 million Spotify plays,” I do believe this is a very serious matter.

    Reply
  6. Avatar
    Lest it be overlooked...

    Though “SoundCloud Bots: The Truth Behind Fake Stats,” was written a few years ago, a series of events and reports culminating over the last week or so relating to Spotify have yet again revealed that the fake play problem still persists today. The article makes reference to SoundCloud; nevertheless, the article is aptly relevant to the issue of fake plays, the way by which fakes plays are manifested and the bigger picture. For example:

    “Since SoundCloud is 100% web-based, its very easy to program a bot to literally perform ANY ACTION a regular user can perform. Armed with a list of e-mail address[es], one could automatically set up hundreds of SoundCloud accounts in a matter of minutes and direct them to follow, like and comment at will.” [Emphasis in original.]

    SoundCloud Bots: The Truth Behind Fake Stats: http://runthetrap.com/2014/04/06/soundcloud-bots-truth/

    This is a very serious matter, and for that reason I strongly suggest that you take the time to read the linked articles included in this particular article as well as those in the linked articles wherein can be found (in a comments section), among other things, the following excerpt from the comment of Andrew Wires:

    “When a new song is uploaded, if it gets enough views on its first day it will go in ‘trending’ and from there more people will discover it. Which is near impossible because of the cheaters and their thousands of fake views. Your songs get pushed down and down and it never gets featured.”

    If this excerpt resonates with you, please take the time to read a little deeper.

    I know not whether SoundCloud has made any further efforts to “clean up their act” so to speak since the time of the writing of the above-referenced article – if they have, kudos to them!!! That said, I do note that SoundCloud does advertise now, if not.

    Advertise on SoundCloud: https://advertising.soundcloud.com/#brand-solutions

    Reply

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