Spotify’s legal team is going to be kept pretty busy for a while defending the company against a $1.6 billion (yes, with a B) lawsuit brought by the Wixen Music Publishing. The company licenses music from about 200 artists, including superstars Tom Petty, Neil Young, The Beach Boys, Donald Fagen, Stevie Nicks, Missy Elliott, and Janis Joplin, according to a report by Variety.
The suit alleges that Spotify is using songs by songwriters that Wixen represents without a proper license. Spotify has been sued for this same in transgression before, proposing to resolve a class-action suit from a collective of songwriters including David Lowery and Melissa Ferrick in May, which many felt was an inadequate settlement.
The Wixen suit states that the previous settlement “does not adequately compensate Wixen or the songwriters it represents.” It goes on with the presumed reasoning behind Spotify’s actions, “Prior to launching in the United States, Spotify attempted to license sound recordings by working with record labels but, in a race to be first to market, made insufficient efforts to collect the required musical composition information and, in turn, failed in many cases to license the compositions embodied within each recording or comply with the requirements of Section 115 of the Copyright Act. Either a direct license from Wixen or a compulsory license would have permitted Spotify to reproduce and/or distribute the Works as part of the Service, including by means of digital phonorecord deliveries (“DPDs”), interactive streaming, and limited downloads. But Spotify failed to obtain either license type.”
What happened was that Spotify outsourced the licensing duties to the Harry Fox Agency, which the suit says “Spotify knew … did not possess the infrastructure to obtain the required mechanical licenses and Spotify knew it lacked these licenses.”
With Spotify attempting to go public soon, this is the sort of legal action and publicity that it doesn’t need. The only lucky thing for the company is that it was filed over the holiday, but enough people in the industry and financial markets noticed so that it will continue to be a drag on the company until it’s settled.