Spotify, the groundbreaking streaming music service, is facing a class-action lawsuit alleging that it violates the copyrights of thousands of independent musicians.
If the songwriters prevail it could cost Spotify tens of millions of dollars in unpaid royalties. And according to experts in the music industry, this may be only the beginning, because other streaming services reportedly commit the same violations.
The named plaintiff in the lawsuit, filed on Monday in the U.S. District Court for the Central District of California, is David Lowery, an outspoken musicians' rights advocate and frontman of rock bands Camper Van Beethoven and Cracker. He says his songs have been streamed hundreds of thousands of times without his permission.
Lowery, who also teaches music business at the University of Georgia, alleges that Spotify streams his songs without getting licenses from him to do it or paying him accordingly.
In a statement, Spotify says it has tried to find rights holders, but "the data necessary to confirm the appropriate rights holders is often missing, wrong or incomplete." Spotify says it has set aside a fund to pay songwriters when they are identified. Earlier this month, it announced that it would invest in "a comprehensive publishing administration system" to better track royalty information.
"The point is not that they didn't set aside royalties; the point is that they never got the licenses in the first place," Lowery tells NPR. "There appears to be no licenses on my songs and a great number of songwriters' songs. Setting aside the royalty, what is that royalty based on? There's no license."
Lowery's lawyer, Sanford Michelman, says Spotify may owe tens of millions of dollars not just in unpaid royalties but also for copyright infringement, which can run as high as $150,000 per violation.
A major sticking point has been how these services pay the musicians for distributing their music. One study of the music business by the Berklee College of Music's Institute for Creative Entrepreneurship suggested earlier this year that anywhere from 20 percent to 50 percent of music payments don't make it to their rightful owners.
And as NPR's Joel Rose has reported, the songwriters often get a far smaller share of those payments:
"The way those royalties are split is far from equal, in part because there are two different types of copyright holders for every song a streaming service plays. One is the owner of the sound recording — that's usually the artist or the record label. The other is the person (or persons) who wrote the song, or someone else to whom rights have been granted, like a music publisher."
(Rose explained in detail the legal framework that guides the music industry in a story earlier this year.)
Here's a bit of background on Lowery's case from The Wrap:
"The class-action suit identifies members of the class to be anyone who owns reproduction and distribution rights of copyrighted songs that have been played by Spotify.
"Lowery has long been an advocate for artists' interests as the music business shifts its business models. In a 2013 blog post, he recounted how online radio service Pandora paid him just $16.89 in songwriter royalties for more than 1 million spins of Cracker's hit song 'Low.' "
Lowery's lawsuit only names Spotify and doesn't include the major song publishers (Sony, for example, has an agreement with Spotify). But Jeff Price, CEO of publishing rights tracking company Audiam, says he has seen a similar problem at all the services, including Apple, Google and Tidal.
"This suit brings to the foreground an endemic problem that has existed since the launch of the interactive streaming music services," Price says.
You can read the full court filing from Lowery below.
ROBERT SIEGEL, HOST:
The music streaming service Spotify is popular among music lovers but controversial in the recording industry. It made headlines when stars like Taylor Swift and Adele accused it of under-paying artists. Spotify denies that. Well, now the company is facing a class-action lawsuit for copyright infringement. It's been filed on behalf of thousands of songwriters. As NPR's Laura Sydell reports, the suit says Spotify never asked permission to use their music.
LAURA SYDELL, BYLINE: Last year, David Lowery and his band Cracker put out an album that included this song, "King of Bakersfield."
(SOUNDBITE OF SONG, "KING OF BAKERSFIELD")
DAVID LOWERY: (Singing) Life is good. They call me the king of Bakersfield.
SYDELL: Lowery registered the song with the U.S. Copyright Office in Washington, D.C. Despite over 22,000 plays on Spotify, he says he never saw any money, and Spotify put up his song without asking him.
LOWERY: This is classic Silicon Valley, which is like, let's just do it and let's try to figure out the problems later.
SYDELL: The problem, says Lowery, is much bigger than just him. He is the name plaintiff in a class-action suit being brought by attorney Sanford Michelman. The suit is specifically about the rights of songwriters who don't necessarily perform the song but who do have the right to get paid when someone makes or distributes copies of their work. Michelman believes there are thousands of songwriters who were never asked for permission to use their music on Spotify.
SANFORD MICHELMAN: They should have reached out to the various artists and said, we want to enter and engage into a license with you and enter into a royalty agreement, just like you would in any other situation.
SYDELL: Michelman says Spotify may owe tens of millions of dollars, not just in unpaid royalties but for copyright infringement, which can run as high as $150,000 per violation. He filed the class-action suit yesterday in the U.S. District Court for the Central District of California. In a statement, Spotify claims it's tried to find rights holders but, quote, "the data necessary to confirm the appropriate rights holders is often missing, wrong or incomplete." Spotify says it has set aside a fund to pay songwriters when they are identified. But when it comes to at least one song named in the suit, "King of Bakersfield," it doesn't seem hard.
And how long did it take you to find it?
JAMES BERGER: Oh (laughter), 10 seconds.
SYDELL: This is James Berger, an independent copyright attorney who did a quick search of the U.S. Copyright Office database and found "King of Bakersfield" and the name of the songwriter. He doesn't understand why Spotify, which was valued at over $8 billion this past summer, didn't do this.
BERGER: I would hire a team of paralegals, which isn't that expensive. Sorry paralegals, you're a valuable help in our field. But get a team of paralegals. They're doing nothing but looking up these songs.
SYDELL: Berger says there are probably songwriters who are harder to find because they didn't register their music. But a spokesperson for the U.S. Copyright Office says Spotify still has to demonstrate it made the effort to find the writer. While this lawsuit only names Spotify, Jeff Price, the CEO and founder of a company called Audium, which tracks publishing rights, says he's seen this same problem at various services, including Apple, Google and Tidal.
JEFF PRICE: This suit brings to the foreground an endemic problem that has existed since the launch of interactive streaming music services.
SYDELL: This particular suit doesn't necessarily include the major song publishers. For example, Sony has an agreement with Spotify. But Price believes the suit may open a can of worms that will involve the entire industry. Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.