Spotify sued US$1.6B in unpaid royalties

Wixen Music Publishing Inc is a Californian music publishing company that collects royalties on behalf of artists including Rage Against the Machine, Stevie Ray Vaughan, Neil Young, Santana, Tom Petty, Stevie Nicks and Missy Elliott.

Spotify hardly needs any introduction. It is arguably the world’s most successful music, podcast and video streaming service that has been running for about a decade and has 140 million users. The Sweden-based company has reportedly filed to go public on the New York Stock Exchange this year.

Wixen have commenced proceedings in a Californian federal court against Spotify alleging that Spotify failed to obtain proper royalty licensing. They say that Spotify did not obtain the composition (‘mechanical’) rights in their deals, separate to the recording rights in songs. Further, Spotify were outsourcing the management of mechanical rights licenses to the Harry Fox Agency which was “ill-equipped to obtain all the necessary mechanical licenses”.

Mechanical rights are usually owned by the composer, song-writer or a music publisher. They refer to the copyright in a song’s composition that allows it to be reproduced and distributed. This is separate to the copyright in the song’s sound recording which is usually owned by the record label.

Wixen are seeking damages of USD$150,000 per song for over 10,000 songs. The suit is valued around USD$1.6 billion.

Far from the first lawsuit Spotify has faced, in 2016 it agreed to a $30m settlement with the National Music Publishers’ Association over unpaid royalties.

Copyright laws and licensing have long lagged behind technological advancements that have allowed companies such as Spotify to flourish without proper accountability. An overhaul is due and indeed now proposed which will hopefully simplify digital licensing by creating a single licensing entity to administer mechanical rights in the US.

Legislation: Copyright Act of 1976 (USA)

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