Spotify to pay out $112m in royalties after U.S. settlement

Written by Lars Brandle on 27th May, 2018
Spotify to pay out $112m in royalties after U.S. settlement

Spotify will have to fork out more than $112 million after a U.S. federal judge approved the settlement of a years-long class action against the streaming giant.

The action, launched separately three years ago by musicians David Lowery and Melissa Ferrick and later combined, alleged that the market-leading streamer unlawfully reproduced and distributed works without permission.

A settlement was agreed last year, to which several parties objected, including Wixen Publishing Group, which represents Stevie Nicks, the late Tom Petty, and Weezer’s Rivers Cuomo, which argued it was “procedurally and substantively unfair,” and others deemed it “grossly insufficient.” More lawsuits followed, including one from Wixen claiming $1.6 billion in damages from Spotify, filed around the time the company announced plans to go public (that case is said to be ongoing).

On Tuesday, however, U.S. District Court Judge Alison Nathan overruled Wixen’s objections and approved the settlement of $112.5 million, including an immediate cash payment of $43.5 million to songwriters who were members of the class.

“The combination of the immediate and future monetary relief, along with the non-monetary benefits provided, constitutes a significant recovery,” wrote Judge Nathan in an opinion.

The development is also a win for Spotify, which may not have to worry too much about further copyright lawsuits on the issue, notes The Hollywood Reporter, which broke the story. Since Wixen opted out of the settlement, it no longer can challenge it.  The case, noted Judge Nathan, “is complex and involves questions about the application of copyright laws in a relatively novel context.”

Spotify doesn’t have cash-flow problems. The Sweden-based company projects full- year revenue to reach or even surpass €5 billion.

All of this went down as major copyright reforms gain momentum in the U.S. Senate. The Music Modernization Act is advocated by the Internet Association, which counts Spotify among its members and claims the new framework would usher in a “new, more efficient system of licensing musical compositions, benefiting creators and innovators alike,” if it’s passed. The bill has already unanimously passed the House of Representatives.

The article was originally published on The Industry Observer