Spotify in Hot Water Facing $150 Million Lawsuit

Radio Facts: Radio Facts: Spotify is being put on the spot by Cracker frontman David Lowrey. The musician and music right’s activist has filed a class action lawsuit against the streaming service company seeking $150 million in damages. Spotify, he claims, has knowingly reproduced and distributed copyrighted material through their service to 75 million users without ownership of proper mechanical licenses. That is a lot of change is seeking in this lawsuit.

According to Lowrey’s lawsuit, Spotify has publicly admitted that it failed to obtain such licenses, using a reserve fund of $17 to $25 million to pay off royalties for the copyrighted music. The complaint, filed in the U.S. District Court of Central California, claims the distributing rightsholders of some songs on Spotify have not been compensated by the company.

Spotify global head of communications and public policy Jonathan Prince issued a statement on the matter:

“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.”

In response to Spotify’s statement, lawyer, Sanford Michelman, who’s representing Lowery in court, said that putting money aside to pay out royalties later is a clear indication Spotify knowingly violated copyright law. He said those have to be paid via contracts hashed out before copyrighted work is used.

“It’s like saying, ‘We know we’ve taken these people’s work, we’ve never made an attempt to find them, but we know we’re playing something without the proper license,” he said.

We will keep a close eye on this to see if a settlement will be put on the table.