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Spotify scores victory in battle over royalty payments

Spotify scores victory in battle over royalty payments

May 24
23:46 2018
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Spotify has scored a victory in a legal dispute with songwriters, after a US federal judge approved a $113m settlement it had agreed with two litigants over royalty payments.

Alison Nathan, a US district judge, overruled an objection to the deal by Wixen Publishing, which represents Fleetwood Mac singer Stevie Nicks and the recently deceased Tom Petty. The company had argued that the settlement included “an unfair dollar amount” that gave Spotify a “98.7 per cent discount for non-wilful infringement” of copyright.

Judge Nathan said that the settlement, which was agreed between the parties last year, constituted “a significant recovery” in payments. 

Wixen separately sued Spotify for $1.6bn in December, around the same time the streaming company announced its intention to go public. That case is ongoing.

The settlement dates back to two class action lawsuits filed three years ago by songwriters David Lowery and Melissa Ferrick, who had advocated for the rights of musicians as the streaming sector boomed. The two had initially filed separate cases before joining forces.

Mr Lowery told Billboard magazine earlier this year that the dominance of streaming had yielded “giant digital monopolies that we now can’t get around”. 

“Streaming is the future of the music business, and I’m not against it — I just want everyone to get paid fairly,” he said.

The ruling comes as the music industry is pushing for legislation to simplify what has been a complex process of paying songwriters when their work is streamed online.

The Music Modernisation Act, which would be the first overhaul of music licensing laws in decades, was passed unanimously by the House of Representatives and is now being considered by the US Senate. It is supported by both music rights holders and the large streaming services — Spotify, Apple, Amazon and Google — who are keen to avoid more lawsuits. 

As streaming has helped to revive the music industry, the creators of music have been scrambling to claim their share of riches from the technology groups that now distribute it. 

While record labels negotiate with streaming companies to agree royalty payments for use of music recordings, payments for songwriters are tied to copyright law, much of which has not been updated for the streaming era.

“This case is complex and involves questions about the application of copyright laws in a relatively novel context,” said Judge Nathan. 

Shares in Spotify were up 1.5 per cent at $156.59 on Thursday. 

Digital streaming is the largest source of music sales in the US, and globally revenues from streaming subscriptions grew 45 per cent last year, helping fuel an 8 per cent rise in music sales.

Spotify and Wixen declined to comment.



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