Spotify to pay out $112m in royalties to songwriters after settlement

Ben Beaumont-Thomas
A Spotify logo on the floor of the New York Stock Exchange. Photograph: Richard Drew/AP

Spotify will pay out $112m (£83.5m) in a settlement agreement, following two lawsuits that claimed songwriters hadn’t been paid enough in royalties for their work being streamed on the service.

The class action, a combination of the two lawsuits, originally came from David Lowery, an musicians’ rights advocate from the band Camper Van Beethoven, and Melissa Ferrick, a songwriter and owner of a music publishing company. They each asserted that Spotify had failed to obtain proper licences to songwriters’ work; Ferrick accused them of “wholesale copyright infringement”.

The victory means Spotify will pay $43.5m in cash, with the rest committed to ongoing payment of artist royalties. Judge Alison Nathan, at New York’s southern district court, described the amount as a “significant recovery” for the artists involved.

It’s also a win for Spotify, which was pushing for the judge to approve the settlement, previously agreed upon in May 2017. The agreement has met with dissent from music publishing company Wixen, which collects royalties for artists including Janis Joplin and Neil Young. The company filed its own $1.6bn lawsuit in January, arguing for damages of $150,000 per song for more than 10,000 songs; it described the settlement decision as “a 98.7% discount for non-wilful infringement” and “a practical free pass on wilful infringement”. Wixen added that the settlement “offers [songwriters] an unfair dollar amount in light of Spotify’s ongoing, wilful copyright infringement of their works”.

Spotify has two other outstanding copyright lawsuits, Bob Gaudio, a founder member of the Four Seasons, and country music publisher Bluewater Music Services Corporation.

The suits are a perhaps inevitable bit of friction for Spotify, as the music publishing industry moves from a copyright structure based on radio and record sales, to one that also takes in streaming services. The new US Music Modernization Act, already approved by the House of Representatives in April, is designed to smooth the legislation around copyright. Republican Robert Goodlatte, who sponsored the act, said the existing legislation “seems to generate more paperwork and attorneys’ fees than royalties”.

Opponents are concerned the act won’t change the currently low royalty rates paid by streaming companies, and that it favours the major publishers over smaller outfits and independent songwriters.