Spotify’s war with music publishers just got 100 times worse. That’s because more than 100 notable musicians — including Tom Petty, Kenny Rogers, the Black Keys, and Zach De La Rocha — are filing legal paperwork to force Spotify to pay them more.
Last week, major music publishers promised a war against Spotify. But it looks like another army has beaten them to the punch.
In paperwork filed in federal court this week, more than one hundred musicians and songwriters demanded that Spotify pay its fair share of publishing royalties.
And yes — the specific royalty in question is the ‘mechanical’ reproduction royalty. Spotify has now declared that reproduction rights don’t apply to them, but potentially billions in legal damages say otherwise. And the list of artists demanding compensation is enough to create a serious public relations nightmare.
The list of protesting artists is impressive: Tom Petty, Zach De La Rocha and Tom Morello of Rage Against the Machine, Dan Auerbach of the Black Keys, Rivers Cuomo of Weezer, David Cassidy, the heirs of Sony Bono, Kenny Rogers, and Kim Gordon. Even Anthony Hopkins, who apparently moonlights in classical composition, is on the list.
Shepherding the rebuttal is Wixen Publishing, just one of a number of publishers upset with Spotify payouts.
At root is a recently-drafted, $43 million settlement over unpaid mechanicals.
This was actually signed before Spotify decided that the entire mechanical license was bullsh-t. But the $43 million accord, one of two major agreements surrounding mechanicals, seemed to offer Spotify an easy escape from a harrowing licensing dispute. But that was wishful thinking.
Now, the overwhelming sentiment is that $43 million is an insult.
“The Settlement Agreement is procedurally and substantively unfair to Settlement Class Members because it prevents meaningful participation by rights holders. It offers them an unfair dollar amount in light of Spotify’s ongoing, willful copyright infringement of their works.”
Actually, this isn’t even a $43 million settlement, according to the plaintiffs. After legal fees, the entire class of writers and publishers have $28.7 million to pick from. After dividing that by over 7.5 million potential claimants, and the per-award fee is about $3.84.
All of which amounts to a near-100% discount off the statutory damages rate of $150,000 per track.
At least that’s the logic of the filing:
“As the Court is well aware, Spotify faces potential liability of up to $150,000 per infringed composition for willful infringement and $30,000 for nonwillful infringement, plus attorneys’ fees and costs. While a discount of some amount is to be reasonably expected as part of a compromise settlement, the discount potentially afforded Spotify in this case is a 98.7% discount for nonwillful infringement and a discount for willful infringement so close to 100% as to give Spotify a practical free pass on willful infringement.”
The blowback could make a settlement impossible. In the unlikely event that the agreement stands, none of these people will buy into the settlement. Instead, they’ll pursue separate claims, with damages reaching $150,000 per infringed work.
Actually, that’s already happening on a separate front. Back in July, Bluewater Music Services and Bob Gaudio decided to file their own lawsuits, with damages approaching $365 million. The led to Spotify’s eventual decision to challenge the entire license itself, with Bluewater & Co. now bristling back and rallying additional publishers to the fight.
All of which makes this a multi-billion dollar war — one that is only just beginning.
Now about that IPO…
I’d think at some point, Spotify would want to take down all the unlicensed music. HFA has a list somewhere of what’s licensed and unlicensed, right? Just sayin’.
Spotify are a bunch of cocky bastards. I could sense it in Nashville last month. I wouldn’t be surprised if this was a Spotify publicity stunt.
If Spotify doesn’t want to pay mechanicals, then maybe premium Spotify services should be given to ALL contributoring artists–and more. Instead of paying for distribution through a third party, perhaps they could pay me monthly for my creative contributions to their library–not to mention payment for all the advertisements bands solicit with Spotify’s logo on it. I’m curious how they would like that. Also, Maybe they should improve their artist services. Example: it would be nice to monitor my Spotify analytics from the Next Big Sound or wherever I choose to monitor them.
Pretty bold, YouTube is still bigger than you, Spotify.
And pays way less hypocrite 🙂
It’s all too odd that Spotfy is running such policies. As a business model and for what it is promising to offer artists and listeners, I don’t understand why the dodgy attitude.
Here’s my opinion, and I could be wrong… I think it has to do with catalog size. Historically, streaming services have competed with each other based on the size of their catalog of music that they make available for streaming. If Spotify only used music in which HFA was successfully able to license the publishing rights, and songwriters were being paid royalties, I would venture to guess that Spotify’s catalog might be closer to 10 million tracks, rather than 30+ million. If Spotify followed the rules, perhaps they wouldn’t be the top streaming service. A streaming service that uses unlicensed music doesn’t have a problem with catalog size. Not only did they screw songwriters, but they illegally gained an unfair competitive advantage over any streaming service who actually sought to only make music available that was fully licensed.
It seems apparent that Spotify is determined to maintain their illegal catalog size at all costs to retain their crown as the top streaming service, at least long enough for them to get their IPO and cash out. They would rather risk being sued out of existence than reduce their catalog. And I believe that is exactly what is about to happen. It’s just a question of whether or not they can stretch out these lawsuits long enough get their IPO, cash out, and retire to some tropical island before the lawsuits reach their inevitable conclusion. I’d like to think that answer is no.
Wixen’s calculations seem fatally flawed, given that they assume 100% class participation and that 100% of the unlicensed works are registered with the copyright office. If they had just kept quiet, joined the class, and taken their pro-rated share of the spoils, the amount received would in all likelihood have been significantly higher than $3.84 per work.
Perhaps it would be higher, depending on whether the methodology of calculating the pro-rata share was based on unlicensed works of participating class members, or all unlicensed works. I doubt it would be significantly higher, though. Certainly no where near $150k per work in willful infringement statutory damages.
No Court is going to award the full amount of $150k per work, since they will never prove willfulness.
But it is fun to take it to the logical extreme, 7.5mn works at $150k per work would come to $1.125trn, – which would be a bit spendy.
I also doubt it would ultimately come out to $150k per work, even if they do prove willfulness (which, by the way, is not beyond the realm of possibility). Maybe a few hundred per song (and an agreement to take down all the unlicensed songs until such time that they become licensed) would be reasonable.
Not sure why everyone seems to think along the lines of “songs HFA managed to acquire copyright for.” HFA doesn’t acquire copyright for anything. They represent and they either represent for statutory mechanical rate or not at all. You can go to the publisher and get a reduced rate but if HFA still admin the mechanical you still need the piece of paper from HFA (which would state reduced rate)
If Spotify were stupid enough to think all the “copyright control” meta data somehow meant HFA had the rights to grant mechanical then they got their wires crossed. Mechanical license requests haven’t changed in 15 years. Even with CDs you got a license from HFA if they represented it. If it was copyright control, then they didn’t and the distributor has to research to find out who owns the rights and then request an independent mechanical license directly from the publisher.
Spotify got their mech licenses from HFA on the songs HFA represented, then basically ignored all the copyright control indies claiming “we have no idea who owns the song but hey we tried to find out… a little bit.. but we will use the song anyway”
In the whole evolution of recorded music over the past 100 years, streaming services like Spotify are the new boys in town. They don’t have the model right. Simple. Things will change and move on. Spotify are Streaming V1.
I really believe that artists or labels can stream their own music and give much more back to the artist. We build apps that let them do just that. If the platform is run by the artist/label then more gets back to everyone.
In the interests of disclosure (and getting a link) :I am the CEO of