License article

Lawsuit seeks US$150 million damages from Spotify

That a challenge to Spotify would end up in the courts seemed inevitable with all the high profile artists - from Taylor Swift to Thom Yorke to the Black Keys and Amanda Palmer - lining up to publicly complain about its royalty payment system in the US.

US musician and artists' rights activist David Lowery has filed a class action against the streaming service Spotify, seeking at least US$150 million in damages, Billboard has reported.

According to Bloomberg Businessweek, Lowery's suit is likely to affect businesses other than Spotify, because it involves licensing issues common to all services that allow users to choose the music they stream. This includes Apple Music.

Spotify is currently involved in talks with the National Music Publishers' Association over rights issues and a proposal to set up a publishing administration system to help facilitate payments. The company is said to have put aside a sum of at least US$17 million to cover rights it has not yet paid for.

Lowery, 55, who is the frontman for the bands Camper Van Beethoven and Cracker, is also a lecturer in the University of Georgia's music business program.

His suit has arrived at the figure of $US150 million based on the statutory damages for copyright infringement: US$750-$30,000 per work, and $150,000 for wilful infringement.

In the licensing of a single piece of music, two separate copyright categories are involved. One is for the sound recording, which is generally owned by the performer's label; the other is for the underlying composition, which is owned by songwriter or his or her publisher. Streaming services such as Spotify need to secure what is known as a mechanical licence for the underlying composition. This can be obtained directly, or by sending a notice of intent to the publisher, 30 days before making the song available on the service. The royalty rate for this licence is set by law.

Lowery's lawsuit, filed on December 28, 2015 in the Central District Court of California, alleges that Spotify "knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses".

Spotify put out a statement in the wake of Lowery's suit. Its global head of communications and public policy, Jonathan Prince, said the company was "committed to paying songwriters and publishers every penny. 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."