Musician Files $US150 Million Class Action Royalty Lawsuit Against Spotify

The world's largest online music streaming service, Spotify, is staring down the barrel of a $US150 million (about $208.2 million) class action lawsuit over allegedly unpaid royalties initiated by veteran musician and activist David Lowery, it has been reported.

According to Billboard, Lowery — who is known for his work as the frontman of outfits such as Cracker and Camper Van Beethoven — retained the services of legal firm Michelman & Robinson to file the complaint in California's Central District Court on 28 December, alleging that Spotify has, without possessing proper license, used music belonging to "himself and … numerous other similary situated holders of mechanical rights in copyrighted musical works … in an egregious, continuous and ongoing campaign of deliberate copyright infringement".

"Specifically, Spotify has — and continues to — unlawfully reproduce and/or distribute copyrighted musical compositions (the "Works") to more than 75 million users via its interactive commercial music streaming service, as well as its offline listening service," the complaint asserts.

"Spotify reproduces and/or distributes the Works despite its failure to identify and/or locate the owners of those compositions for payment or to provide them with notice of Spotify's intent to reproduce and/or distribute the Works."

Prior to the submission of the complaint, Spotify had announced its intention to "build a comprehensive publishing administration system" in order to better serve their stakeholders, who can presently go unpaid "because the data necessary to confirm the appropriate rightsholders is often missing, wrong or incomplete," the company said.

However, Lowery's class action maintains that Spotify's alleged non-payment is "knowing and willful" — a crucial factor in deciding how much should be paid out in damages — and that the streaming service "has publicly admitted its failures to obtain licenses for the musical works it distributes or reproduces, or to pay royalties to copyright owners for its use of their Works".

"Moreover, Plaintiff is informed and believes that Spotify has created a reserve fund of millions of dollars wherein the royalty payments Spotify wrongfully withholds from artists are held," it continues. "The existence of this fund reflects Spotify's practice and patern of copyright infringement, wherein Spotify reproduces and/or distributes the Works without first obtaining appropriate authorisation or license."

Spotify, which is already embroiled in ongoing settlement negotiations with the National Music Publishers Association, said in a statement via global head of communications and public policy Jonathan Prince that the company is "committed to paying songwriters and publishers every penny", though admitted to the existence of a fund for unidentified rightsholders (claimed by Billboard to be valued about $US17 million to $US25 million).

"When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities," Prince said in his statement. "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 solve this problem for good."

Lowery says he is making the claim "on behalf of all songwriters", with Billboard reporting that the complaint qualifies as class action because "there is a well-defined community of interest in the litigation and that members of the proposed class, which will exceed 100 members, can be easily identified via discovery from Spotify's database files and records".

The complaint is looking to recover compensatory damages of an amount to be determined at trial, in addition to statutory damages for all penalties under the Copyright Act, pre- and post-judgment interest on monetary awards, and legal fees.

Lowery has since expressed his gratitude for the support shown to his class action in the wake of its submission.