Spotify Sued For $150 Million for Copyright Theft

[thebes]

I've published several articles here before on the outright rampant content theft these streaming companies are engaged in. Money is all these scumbags understand so I can only hope this man's suit is successful.  Glad somebody is standing up to these thieves.

 

I make my own personal statement by buying music, not streaming it.

 

Here's an article about it from Billboard:

 

Vocal artist rights advocate David Lowery brings a massive action against the largest streaming service.

 

 

Camper Van Beethoven and Cracker frontman David Lowery, retaining the law firm of Michelman & Robinson, LLP, has filed a class action lawsuit seeking at least $150 million in damages against Spotify, alleging it knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.

The lawsuit comes amidst ongoing settlement negotiations between Spotify and the National Music Publishers Assn. over the alleged use of allowing users to play music that hasn’t been properly licensed, and also without making mechanical royalty payments to music publishers and songwriters. According to sources, Spotify has created a $17 million to $25 million reserve fund to pay royalties for pending and unmatched song use.

The lawsuit was filed on Dec. 28 in the Central District Court of California.

According to the complaint, Spotify has unlawfully distributed copyrighted music compositions to more than 75 million users, but failed to identify or locate the owners of those compositions for payment, and did not issue a notice of intent to employ a compulsory license.

"We are committed to paying songwriters and publishers every penny," says Spotify global head of communications and public policy Jonathan Prince in a statement. "Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong, or incomplete. When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities. 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 build a comprehensive publishing administration system to solve this problem for good."

The complaint states that Spotify has "publicly" admitted its failure to obtain licenses and created a reserve fund of millions of dollars for royalty payments which have been "wrongfully withheld from artists." The use of songs not lawfully licensed "creates substantial harm and injury to the copyright holders, and diminishes the integrity of the works," the complaint states.

 

The songs alleged to have been Illegally reproduced and/or distributed by Spotify include "Almond Grove" (copyright registration No. PAu003764032); "Get On Down the Road" (No. PAu003745342); "King of Bakersfield" (No. PAu003745341); and "Tonight I Cross the Border" (No. PAu003745338), according to the complaint.

The complaint further notes that statutory penalties allow for judgments between $750-30,000 for each infringed work, and up to $150,000 per song for willful infringement.

The complaint claims the lawsuit qualifies as a 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. A class action is more efficient than letting the courts be burdened with individual litigation, if every member of the class could afford to pursue action (which is highly unlikely). Class actions conserve the resources of the parties and the court system and protects the rights of each member of the class.

In addition to entering an order appointing Lowery as the class representative and the plaintiff's counsel as class counsel, the complaint asks the court to enjoin Spotify from continued copyright infringement; from further violations of California Business & Professions Code § 17200; injunctive relief that requires Spotify to pay for the services of a third party auditor to identify the works reproduced and distributed by Spotify without first obtaining a mechanical license; and requires Spotify to remove all such works from its services until it obtains the proper licenses.

Lowery, who also teaches at the University of Georgia, and the class seek restitution on Spotify's unlawful proceeds, including defendants' gross profits; for compensatory damages in an amount to be ascertained at trial; statutory damages for all penalties authorized by the Copyright Act; reasonable attorneys' fees and cost; and pre-and post judgment interest on monetary awards.

 

[mattSER]

I've bought more music than ever in my life thanks to using Spotify as a discovery engine.

[derrickdj1]

Can we still use Kazaa or Frostwire for illegal downloads.  That's got to be OK.  Right, some body, right?

[Paducah Home Theater]

Just a strange lawsuit.  If you don't want your music on Spotify due to not getting compensated fairly, then yank it.  Taylor Swift did it.  These guys are trying to have their cake and eat it too.  They obviously want the widespread exposure of Spotify due to being has-beens at this point, but want to be paid more.  Sounds to me like more negotiations would be in order rather than a 9 digit lawsuit.

 

Seriously, guys, its not the 90's anymore.  This singer should consider himself to be lucky if he gets paid anything at all.   

Edited January 11, 2016 by MetropolisLakeOutfitters

[Fjd]

Just a strange lawsuit.  If you don't want your music on Spotify due to not getting compensated fairly, then yank it.  Taylor Swift did it.  These guys are trying to have their cake and eat it too.  They obviously want the widespread exposure of Spotify due to being has-beens at this point, but want to be paid more.  Sounds to me like more negotiations would be in order rather than a 9 digit lawsuit.

 

Seriously, guys, its not the 90's anymore.  This singer should consider himself to be lucky if he gets paid anything at all.   

 

 

 

It's not the 70's and 80's anymore either where I would end up buying the vinyl record, 8-track tape, cassette tape and the CD and paying $10 - $15 each to allow for the portability of listening of two or maybe three good songs on the entire album and a lot of crappy filler material.  With the distribution systems today you sure can tailor your music acquisitions and hopefully prod the artists and publishers to quit producing crap and selling that crap at premium prices.

 

 

I don't ever want to deny anyone from earning a living; however, since it seems clear from the article that there are ongoing negotiations with the National Music Publishers Association (NMPA) I decided to look them up and now I find it strange where this lawsuit seems to be sticking the middle finger out at the National Music Publishers Association (NMPA) too instead of joining them in support of what appears to be current ongoing negotiations in recognition of the problems with this type of music distribution format. 

 

It is my basic understanding that in the music industry, a music publisher (or publishing company) is responsible for ensuring the songwriters and composers receive payment when their compositions are used commercially. Through an agreement called a publishing contract, a songwriter or composer "assigns" the copyright of their composition to a publishing company. In return, the company licenses compositions, helps monitor where compositions are used, collects royalties and distributes them to the composers. They also secure commissions for music and promote existing compositions to recording artists, film and television.

 

The copyrights owned and administered by publishing companies are one of the most important forms of intellectual property in the music industry. (The other is the copyright on a master recording which is typically owned by a record company.) Publishing companies play a central role in managing this vital asset.

 

I don't have time to dig deeper today, but this seems to be a start and I'm sure others with more in-depth information from either position will chime in.

 

 

Link to the mission statement of the NMPA trade association and I did notice that they have a lobbying PAC too.

 

National Music Publishers Association

http://nmpa.org/about/#mission_statement

 

Founded in 1917, the National Music Publishers’ Association (NMPA) is the trade association representing all American music publishers and their songwriting partners. Its mission is to protect, promote, and advance the interests of music’s creators. The NMPA is the voice of both small and large music publishers, and is the leading advocate for publishers and their songwriter partners in the nation’s capital and in every area where publishers do business.

 

The goal of NMPA is to protect its members’ property rights on the legislative, litigation, and regulatory fronts. In this vein, the NMPA continues to represent its members in negotiations to shape the future of the music industry by fostering a business environment that furthers both creative and financial success. The NMPA has remained the most active and vocal proponent for the interests of music publishers in the U.S. and throughout the world, a continuing tradition of which the association is very proud.

 

Music publishers are essentially songwriter promoters. They work to pair talented songwriters with artists which results in exposure to the public and income for the songwriter. Music publishers “pitch” songs to record labels, movie and television producers and others who use music, then license the right to use the song and collect fees for the usage. Those fees are then split with the songwriter.

Types of Licenses Issued by Music Publishers

• Reproduction (Mechanical) Licenses: Music distributed in physical and digital form. The royalties are generally collected and paid by the Harry Fox Agency.
• Public Performance Licenses: Music broadcast on radio (terrestrial and satellite), in live venues, and other public places. The royalties are collected and paid by public performance societies (ASCAP, BMI, and SESAC). Each broadcaster receives a blanket license from each performing rights society, in exchange for a royalty fee.
• Synchronization Licenses: Music used in film, television, commercials, music videos, etc. Publishers enter into direct licenses with users.
• Folio Licenses: Music published in written form as lyrics and music notation either as bound music folios or online lyric and tablature websites. Publishers enter into direct licenses with users

 

As the trade association representing American music publishers, every day NMPA aggressively fights for the rights of music publishers and their songwriting partners.  Our actions have resulted in nearly a half-billion dollars in judgments and distributed funds through litigation and settlements; over $230 million distributed through late fee settlements; as well as unprecedented model licensing agreements over music video rights and direct licensing practices.  As music increasingly defines a new digital frontier, and traditional revenue models shift, NMPA’s work is more important than ever.

 

Simply put, NMPA promotes, protects and advances the interests of music publishers and songwriters in matters relating to domestic and global protection of copyrights.  When you  join NMPA, you help shape the future of our industry.

 

The NMPAC is the bipartisan political action committee (PAC) of the NMPA, which is registered with the Federal Election Commission (FEC). The funds raised by NMPAC are used to support candidates of the United States Senate and House of Representatives who share the values of music publishers and songwriters.

Edited January 11, 2016 by Fjd

[Wolfbane]

I agree, the only way to keep artists making music is to pay for that music.

 

Wb

[RottenPilot]

I pay 20 dollars per month to stream from Tidal Hi-Fi and like that I can hear a variety of music before I purchase it. I have purchased 1000's of dollars worth of records in the last several months. Many of the purchases were because I could hear the album prior to making my decision. Some of these vinyl albums range from a just a few dollars used to 50 dollars new as well as some special first pressings were 100's of dollars.

 

Now that I have decided to buy a record. I hop in my car and drive to my local record store listening to my radio. Free music over the air that comes into my car. How is that different from streaming? My radio is free. If I wanted to, I could record the songs straight from the radio just like I did when I was a kid. How does the artist get compensated from the radio station. They don't even pay for their music, they are provided music from the record labels to promote sales. radio makes money to run the station through advertising, not playing music. We hear it, and if we like it enough, maybe, just maybe we buy it. Maybe we never buy it and listen to it several more times on the radio for free. I think there is more to it than streaming and who pays.

 

The music industry is hugely corrupt. They guys with the biggest lawyers win. Have you ever seen an artists first record contract? It's a rarity that the artist get a fair deal and almost never a good deal. I can tell you that the the record company comes out on top and they come out on top every time. Where is the record company in this law suit?

 

Speaking of artists getting paid, on Monday, I heard Midnight Mambo from Sonny Clark on a local Jazz station. I just purchased Leapin' and Lopin' from Sonny Clark for $54.99. Last time I checked, Sonny has been dead for a long long time. Where does the $54.99 go. Sonny isn't getting paid for for this album.

 

Just sayin....

 

  

[bobdog]

I pay 20 dollars per month to stream from Tidal Hi-Fi and like that I can hear a variety of music before I purchase it. I have purchased 1000's of dollars worth of records in the last several months. Many of the purchases were because I could hear the album prior to making my decision. Some of these vinyl albums range from a just a few dollars used to 50 dollars new as well as some special first pressings were 100's of dollars.

 

Now that I have decided to buy a record. I hop in my car and drive to my local record store listening to my radio. Free music over the air that comes into my car. How is that different from streaming? My radio is free. If I wanted to, I could record the songs straight from the radio just like I did when I was a kid. How does the artist get compensated from the radio station. They don't even pay for their music, they are provided music from the record labels to promote sales. radio makes money to run the station through advertising, not playing music. We hear it, and if we like it enough, maybe, just maybe we buy it. Maybe we never buy it and listen to it several more times on the radio for free. I think there is more to it than streaming and who pays.

 

The music industry is hugely corrupt. They guys with the biggest lawyers win. Have you ever seen an artists first record contract? It's a rarity that the artist get a fair deal and almost never a good deal. I can tell you that the the record company comes out on top and they come out on top every time. Where is the record company in this law suit?

 

Speaking of artists getting paid, on Monday, I heard Midnight Mambo from Sonny Clark on a local Jazz station. I just purchased Leapin' and Lopin' from Sonny Clark for $54.99. Last time I checked, Sonny has been dead for a long long time. Where does the $54.99 go. Sonny isn't getting paid for for this album.

 

Just sayin....

Radio stations do have to pay royalties on the music they play.  The money goes to the songwriter not the recording artist though.

[thebes]

Bob and Matt I hear where you are coming from, but I strongly suspect that you are a minority in the land of streamers. After all, if you have unlimited access to everything you want to hear for say $10 a month, why buy? That is the stark truth of streaming.

 

Let's look at, for an example, the newest entry into streaming, Apple streaming.  I hear they got 10 million customers, so I'm guessing at $10 a pop that's $100 mil.  They are probably laying out a $1 mil of that for using the music, $3 or $5 mil for servers, maybe the same again for overhead and marketing. , so at least a 80 percent profit.

 

The old record industry model was basically artistic slavery.  Now those so wonderful, we-love-them-all-cause they-wear-blues-jeans-to-the-stockholders-meetings teckie bosses, are making the old robber barons blush.  With envy! Their hands are free of the blood, but they are certainly complicit, in the rape of intellectual property in this country. 

 

Meanwhile, the artists, composers, and singers musicians who brought this magic to our ears can only make a living on the road.  Some of the greatest artists of are times that are still performing have to end an evening of playing their hearts out with degrading meet-and-greets with vip ticket holders.

 

At at those meet and greets the poor souls get to answer the same lame questions over-and-over-again. 

 

Example:

 

Danger Dick, lead singer of the Birmingham Four shakes hands with an aging  well-healed Boomer who asks him what his inspiration was for the Birmingham Four's all time greatest hit, "I Wanna Screw Bambi"

 

"Well", replies Danger in a heavy cockney accent, "some people think the song was a protest against the exploitation of a cute little baby deer who'd recently lost her mother, but in fact, in my school, there was this chick named Bambi. She was the sexist girl on the planet, big Birmingham knockers, which had this lovely habit of going every which way when she ran down the halls, which for some reason she did a lot, and her bum, my God man! (drool, running down his lips).

 

So I walks right up to her and says "Bambi, I wanna..."

Edited January 16, 2016 by thebes

[bobdog]

Thebes, I am not sure if I am the Bob you are referring to in the above post but let me make myself clear.  I cannot stand streaming services and will never use them.  I am with you and hope the services lose the lawsuits.  

[thebes]

Sorry. I meant RottenPilot.

[mattSER]

Thebes, I don't know about Apple music, but Spotify pays out 70-110% of their gross income to labels and publishers.

I highly doubt Apple is making "80% profit" off of their streaming music service. Spotify often runs in the red trying to pay the labels.

[Fjd]

Thebes, I don't know about Apple music, but Spotify pays out 70-110% of their gross income to labels and publishers.

I highly doubt Apple is making "80% profit" off of their streaming music service. Spotify often runs in the red trying to pay the labels.

 

 

I've read that 80 cents per dollar of revenue is related to royalty expenses and was looking for financial statements but haven't had much time to track them down. 

 

In some respects it seems that the more things change, the more they really stay the same.  For example, part of the problem appears to be that the amount of money Spotify pays music labels does not equal the amount of money artists see from allowing their music to be streamed.  In other words, it would seem that in the context of streaming music, the music labels are still sticking it to the artists. 

[mungkiman]

2nd lawsuit - $200M

 

http://www.billboard.com/articles/business/6836439/spotify-hit-with-second-copyright-infringement-lawsuit-melissa-merrick-david-lowery

[Travis In Austin]

was looking for financial statements but haven't had much time to track them down.

 

I was hoping you would chime in with your always balanced and educated explanation of all things financial.

 

I subscribe to Billboard, including their email blasts and blog updates (an uncle works for their parent),

 

If you google for "Billboard Spotify income statement", it will get you where you to where I would think you would want to start.  First, whey they are using percentages as cost of sales, they are including things that should not be included.  When they say they return close to 100 percent, that isn't accurate.  It is more in line with the 75 or 80 percent you have been hearing.

 

Billboard puts on a music industry business/economics symposium every year in LA. I attended one almost 15 years ago and Todd Rundgren (that Todd Rundgren) spoke and told the audience that while download were going to take over, where things would be heading  was interactive technology.  He told the record company executives in the audience they if they hadn't learned the hard lessons already from CD being overtaken by downloads, they had better be prepared for what was coming with interactive internet.  He predicted  that the world of music would be universal and unbroken, that like cable and satellite TV, music would no longer be bought in units, whether CDs, downloads; music would be a service paid for monthly.  He was highly in favor of that model, which he said that the record company executives in the room were probably not too pleased to hear, but if they can figure out where they fit in that model they will be much better off.  He believed that after things shook themselves out that a subscription service takes care of everyone in an equitable way, especially the artist.

 

Travis
 

[Travis In Austin]

Here are some links on the articles and the incomestatements:

 

http://www.billboard.com/biz/articles/news/1083499/business-matters-accounting-explains-how-spotifys-business-model-can

 

http://www.billboard.com/articles/business/6561113/spotify-losses-accelerate-as-revenue-grows-to-122-billion

[mattSER]

was looking for financial statements but haven't had much time to track them down.

I was hoping you would chime in with your always balanced and educated explanation of all things financial.

I subscribe to Billboard, including their email blasts and blog updates (an uncle works for their parent),

If you google for "Billboard Spotify income statement", it will get you where you to where I would think you would want to start. First, whey they are using percentages as cost of sales, they are including things that should not be included. When they say they return close to 100 percent, that isn't accurate. It is more in line with the 75 or 80 percent you have been hearing.

Billboard puts on a music industry business/economics symposium every year in LA. I attended one almost 15 years ago and Todd Rundgren (that Todd Rundgren) spoke and told the audience that while download were going to take over, where things would be heading was interactive technology. He told the record company executives in the audience they if they hadn't learned the hard lessons already from CD being overtaken by downloads, they had better be prepared for what was coming with interactive internet. He predicted that the world of music would be universal and unbroken, that like cable and satellite TV, music would no longer be bought in units, whether CDs, downloads; music would be a service paid for monthly. He was highly in favor of that model, which he said that the record company executives in the room were probably not too pleased to hear, but if they can figure out where they fit in that model they will be much better off. He believed that after things shook themselves out that a subscription service takes care of everyone in an equitable way, especially the artist.

Travis

That's great. He was basically telling label execs that they'd better find themselves a useful job if they want to continue making money off of other's music.

Sucks when technology takes your job, but you can't sue your way around it.

[bobdog]

Beyond the payment for work issues.  The brick walled mastering on almost every song played on the streaming sites makes the services unlistenable to me on my systems.  I will never pay for something that literally gives me a headache.  There is almost no music that I listen to (mostly rock from the 60s on) that has not been slammed at one point on a remaster, and without fail the service will be playing the supposedly latest and greatest brick walled version.  I hate to say it but enjoying my music is dependent on seeking out the best masterings which will almost never be what I can stream.