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Spotify Settles Class Action Lawsuit for $43.4 Million

May 31, 2017
Post by Brandon W. Clark

In February of last year, I wrote a blog discussing the filing of a class action lawsuit against Spotify seeking $150 million in unpaid mechanical royalties (Read the previous post here). In a settlement announced on Friday, Spotify has agreed to set up a fund worth $43.4 million to compensate songwriters and publishers whose compositions were used without paying mechanical royalties.

Mechanical royalties are a type of publishing license paid to the owner of the copyright in the composition of a song. They cover the specific act of reproducing a work and have been the focus of many lawsuits as the music industry shifts to a more streaming-centered model (See Spotify/NMPA Settlement).

Under the proposed terms of the settlement agreement, which must still be approved by the court, Spotify agrees to set up a fund worth $43.4 million to compensate songwriters and publishers for past royalties using metadata matches to verify ownership and payment information. Additionally, the proposed settlement agreement sets forth a process for class members of the lawsuit to automatically receive future royalties. Beyond monetary relief, the proposed agreement provides that Spotify will collaboratively work with songwriters and publishers to improve the gathering and collecting of information about composition owners to help ensure those owners are paid their royalties in the future.

The settlement likely avoids a very lengthy and expensive court battle and represents an important step toward resolving how Spotify, and other streaming services, deal with the issue of mechanical royalties.

Brandon W. Clark is the Chair of the Copyright, Entertainment & Media Law Practice Group at McKee, Voorhees & Sease, PLC. For additional information please visitwww.ipmvs.com or contact Brandon directly via email atbrandon.clark@ipmvs.com.


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