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When streaming equals stealing: Spotify is sued again.

Music streaming service Spotify is back in the spotlight after more allegations of copyright infringement regarding the illegal use of thousands of unlicensed musical compositions.

After recently settling a class action lawsuit for $43.4 million in May of this year, Spotify now faces two more lawsuits concerning copyright infringement.    and filed separate suits against the music streaming giant on July 18 alleging it failed to obtain the proper licenses to several thousand song compositions.  Spotify is the world leader in subscription streaming with more than 140 million active users and more than 50 million subscribers.

Despite having received the termination letters, Spotify has continued to stream and reproduce … songs, thereby committing willful copyright infringement.

In the first suit, Bob Gaudio claims Spotify unlawfully streamed over 100 of his compositions.  Gaudio is a songwriter and founding member of Frankie Valli and the Four Seasons, a band whose biggest hits include “Rag Doll,” “Can’t Take My Eyes Off of You,” and “Sherry,” all of which are at issue in the current suit.  One of the band’s most popular hits, “December 1963 (Oh What a Night),” which Gaudio co–wrote, is another song listed as not being properly licensed and has over 57 million streams on Spotify.  For the majority of the compositions, the complaint states, “Spotify had a license at one time, but it was terminated in July of 2016 for failure to comply with law and applicable requirements.”  Despite having received termination letters, Spotify has continued to stream and reproduce Gaudio’s songs, thereby committing willful copyright infringement according to the complaint.

The second suit filed by Bluewater, an independent music publisher and copyright administrator based in Nashville, TN, claims Spotify has illegally streamed and reproduced 2,339 musical compositions from its catalog despite having Spotify’s applicable licenses terminated in November of last year.  Some of the songs Bluewater alleges Spotify has been infringing upon include Guns ‘N Roses’ “Yesterdays,” Miranda Lambert’s “White Liar,” and Player’s “Baby Come Back.” As in Gaudio’s complaint, Bluewater’s complaint states that “anything less than the maximum $150,000 statutory damage award for each of the Infringed Works involved herein would encourage infringement, amount to a slap on the wrist, and reward a multibillion dollar company, about to go public, that rules the streaming market through a pattern of willful infringement on a staggering scale.”

“[S]ongwriters and publishers should not have to work this hard to get paid, or have their life work properly licensed, and companies should not be allowed to build businesses on the concept of infringe now and ask questions later.” 

The two complaints were filed by Richard Busch of King & Ballow, a Nashville, TN, based law firm where he specializes in entertainment litigation and intellectual property litigation.  Busch compared Spotify to Napster, the notorious file–sharing service of the late 1990s that allowed unlicensed songs to be widely downloaded.  In remarks made after filing both suits, Busch commented, “As we say in the [c]omplaint, songwriters and publishers should not have to work this hard to get paid, or have their life work properly licensed, and companies should not be allowed to build businesses on the concept of infringe now and ask questions later.”

This is not the first or even second time Spotify has been sued for copyright infringement.  As mentioned above, Spotify settled a class action lawsuit led by David Lowery, lead singer and songwriter for the bands Cracker and Camper Van Beethoven, for $43.4 million just a couple months ago.  Spotify also settled another suit in 2016 for $30 million with the National Music Publishers’ Association (NMPA), which is a trade association for all American music publishers and songwriters and whose mission is to “protect, promote, and advance the interests of music’s creators.“  Those settlements opened the door for thousands of songwriters and music publishers to cash in on unpaid royalties owed to them by Spotify.  In addition, Spotify agreed that it “will work collaboratively to improve the gathering and collecting of information about composition owners to help ensure those owners are paid their royalties in the future.”

[T]here were approximately $35 billion in unpaid streams between June 2011 and the end of 2015, as well as an alleged failure to pay approximately $15 million in royalties…

The attorney for the plaintiffs in the current suits has stated that those settlements were unfairly low and pointed out that the largest members of the NMPA—Sony, Warner, and Universal—all have parent companies that also own a combined 18 percent of Spotify.  Estimating that there were approximately $35 billion in unpaid streams between June 2011 and the end of 2015, as well as an alleged failure to pay approximately $15 million in royalties, Bluewater asserts that past settlements, including the one with the National Music Publishers Association, have done nothing “to resolve the outstanding issues with the Spotify licensing and royalty payment system as the settlement allowed Spotify to continue to not pay accurately and did not require it to build any systems moving forward.”

Legwork for Gaudio’s lawsuit was done by Audiam, an administrative service that helps copyright owners track royalties owed by digital music services.  In prepared remarks, Audiam founder Jeff Price blasted Spotify for building its business on the backs of songwriters and publishers who have not been paid for their work.  According to the lawsuit, Audiam sent Spotify written communications seeking to help the company identify the songs that were posted without licenses, but Spotify did nothing in response.

In a report by NPR on Spotify’s previous settlements, Price explained: “All on–demand services [like Spotify, or Apple Music] are required to get permission—a license—from songwriters.  And many of the challenges that face Spotify also face these other services.   If you’re going to create a company that uses other people’s [intellectual property] to make money, you need to build an infrastructure [that identifies] and gets permission to use [the property], and then make the appropriate payment.  Fortunately in the United States, we have laws that protect peoples’ use of their intellectual property.”

Also something to note is Spotify’s plans to transition from a privately held company to a publicly traded corporation either this fall or early spring.  Spotify was fortunate to have settled for less than the maximum amount of damages that could have been awarded if the lawsuits had gone to trial.  The current suits, on the other hand, may present a more difficult obstacle for Spotify to overcome, as Busch is more than willing to go to trial, having stated, “We look forward to litigating these cases.”

A local news station in Nashville, TN, Fox 17, also reported on Busch’s eagerness to hold Spotify accountable.  Quotes from Busch relayed in Fox 17’s report reveal his view on the matter: “A multi–billion dollar business we allege not caring about committing copyright infringement or paying songwriters or publishers for their work, so they can be first in market to rule the streaming industry…. They’re about to go public on this multi–billion dollar business that we allege is built on the concept of infringe now, deal with it later and settle on the cheap when caught.”

[I]t seems hopeful that artists injured by Spotify’s inadequate compensation system may finally get what they are owed.

Busch has an impressive background in litigating high profile copyright infringement cases.  As the attorney who represented the estate of Marvin Gaye, he helped his clients win an infringement case against Pharrell Williams and Robin Thicke, who he described to the Hollywood Reporter as “bullies.”  The case involved meticulous comparisons of notes and rhythms between Marvin Gaye’s “Got to Give It Up” and the defendant–duo’s “Blurred Lines,” which was described in greater detail in a previous Campbell Law Observer article written last year.

With Busch’s preference not to settle, Spotify should expect a lengthy trial and extensive discovery.  It probably will not help Spotify’s case that it has admitted to not paying certain artists it cannot track down, as this is proof that Spotify is not complying with Section 115 of the Copyright Act.  Under current law, streaming firms like Spotify are not required to negotiate royalty deals with publishers, but they must issue a notice of intention to obtain a compulsory license, and such notices can also be posted with the U.S. Copyright Office.  It is still unclear whether or not these lawsuits will finally be the encouragement Spotify needs to start implementing the requisite systems that will ensure artists are being paid when their compositions are streamed.  However, given Busch’s track record in similar cases, it seems hopeful that artists injured by Spotify’s inadequate compensation system may finally get what they are owed.

Katie King
About Katie King (12 Articles)
Katie King is a third year law student and serves as Managing Editor for the Campbell Law Observer. Originally from Calabash, NC, Katie went to NC State University where she received a Bachelor of Arts in History. During her second year, Katie worked in real estate at Brady Law Firm located in Raleigh, as well as in the Chambers of The Honorable Judge John M. Tyson at the NC Court of Appeals. Her legal interests include corporate law, real property, and estate planning.