Spotify has just been hit with a class action lawsuit this week as the music streaming giant was aware of its actions to distribute songs without properly obtaining songwriting rights in the United States. The lawsuit filed by Camper Van Beethoven and Cracker frontman David Lowery seeks about US$150 million in damages against Spotify.
Camper Van Beethoven and leader of rock band Cracker David Lowery have filed the suit Monday in a federal court in California. The lawsuit contends that Spotify is putting up many songs available on its service even without properly securing their mechanical rights.
In essence, mechanical rights are the copyright holder's control over musical works and its reproduction. According to the lawsuit, Spotify allegedly copies and distributes versions of his songs on its platform, which delivers streamed music straight to 75 million people globally, with 20 million of which are paying for premium subscriptions.
According to reports, the lawsuit came in the midst the ongoing settlement negotiations between the streaming giant and the National Music Publishers Association about letting users play music tracks that have not yet been properly licensed. Sources said that Spotify has a reserved fund amounting between US$17 million to US$25 million to pay royalties for songs used that are pending and unmatched.
Spotify recently took it to its official blog to lay out how complicated music-licensing is, and noted that it has paid over more than US$3 billion in royalties since the platform launched. "When one of our listeners in the US streams a track for which the rights holder is not immediately clear, we set aside the royalties we owe until we are able to confirm the identity of the rights holder. When we confirm the rights holder, we pay those royalties as soon as possible," wrote Spotify's James Duffet-Smith in the blog post.
Spotify said that the royalties it has set aside an amount only to a fraction of one perfect for all the royalties it had paid. However, it doesn't change the fact that those royalties are still important profits for songwriters and publishers, and Spotify wants to make sure that it goes to the rightful owners.