Spotify‘s music streaming business has been the subject of intense scrutiny over the last few months and it appears one part of that scrutiny is coming to a head. A class action lawsuit submitted by Camper Van Beethoven and Cracker’s David Lowery is seeking $150 million from Spotify for damages from “knowingly, willingly, and unlawfully reproducing and distributing copyrighted compositions without obtaining mechanical licenses”. TheÂ lawsuit stems from Spotify’s policy of only providing royalties when it can identify who the royalties should go to – otherwise, the money goes into a “royalty bank” for when the copyright owner can be identified. In Spotify’s own words:
“We are committed to paying songwriters and publishers every penny.Â Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong, or incomplete. When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities. We are working closely with the National Music Publishers Association to find the best way to correctly pay the royalties we have set aside and we are investing in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem for good.”
Lowery is seeking up to $150,000 for each infringed song, so you can see how quickly this all adds up if Spotify is found guilty of intentionally withholding royalties. It does beg the question of whether more music streaming services are also guilty of similar charges, and if so, the outcome of this lawsuit could have far-reaching consequences for the industry.
What do you think about Spotify’s predicament? Let us know your thoughts in the comments below.