Intellectual Property

Musicans Drop Holiday Hurt On Spotify With Copyright Infringement Case

It will be fascinating to see how aggressively Spotify attacks in litigation the very artists whose work its service relies on and celebrates.

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A massive salvo in the long-gestating battle royale between musicians and streaming services was heaved across the transom late last year as most of us were busy digesting our Christmas figgy pudding. If you consumed the content that was my year-end column, you were advised that the streaming wars would be popping off with vigor in 2018. And, hoo-boy, was I prescient.

A mere two weeks after that column, on December 29, Wixen Music Publishing, a company that handles the administration of composition royalties for over 50,000 songs by a gaggle of huge songwriters like Neil Young, Stevie Nicks, Rivers Cuomo, and Tom Petty (R.I.P.), went all Scrooge on Spotify, dropping a 1.6 billion dollar bomb that landed smack-square on the Swedish tech juggernaut’s julbord. The complaint contained allegations of widespread and willful infringement of a whole bevy of songwriters’ rights in thousands upon thousands of songs, the aggregate of which Spotify has allegedly streamed billions of times.

Other copyright cases involving the issue of Spotify failing to play by the rules continue to percolate. One of them, Ferrick et al. v. Spotify USA Inc. et al., which also detailed allegations of a systematic failure to compensate musicians, is on the verge of a court-approved 43 million dollar settlement. But the Wixen case brings to bear unprecedented firepower and a seeming inclination to litigate this matter through trial, which could establish for any future cases the legality or illegality of Spotify’s music licensing scheme.

The problems with that scheme are laid bare in Wixen’s pleadings, which note that Spotify, a multibillion-dollar mega-corp with a whole retinue of highly paid lawyers and consultants, has made it clear that it can’t be bothered with actually negotiating contracts with, or compensating, many of the artists that provide the content that powers its tech platform.

Getting down to the granular pleading level, Wixen asserts that Spotify “repeatedly failed to obtain necessary statutory, or [‘]mechanical,[‘]” licenses to reproduce and/or distribute musical compositions on its service.” Of course, “distributing musical compositions” is basically all that Spotify does, so its failure to take the necessary and legal step of obtaining the proper licenses is quite problematic and copyright-infringing indeed.

To fully understand the issue, it is important to understand that each song has not one but two copyrights — a copyright in the composition (think of the actual sheet music, which can be further separable into discrete copyrights for the lyrics and the music) of the song, and a copyright in the recording of the song. If one obtains the right to use the recording but not the composition, one has a problem if they exploit the song commercially. And that is what Spotify is alleged to have done in the recent suit.

Wixen alleges that Spotify, as it built its billion-dollar valuation and made deals with large records labels like Universal Music Group that addressed the right to stream the recordings of certain songs, failed to make similar deals with the songwriters or those who held the copyright to the compositions to those songs. As anyone who has taken a basic music law seminar during their 2L year can tell you, this is a very obvious and rookie mistake.

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Wixen’s complaint alleges that Spotify, in preparing to meet its US launch date in 2011, decided against delaying the roll-out of its product and in favor of committing widespread copyright infringement and dealing with the consequences later. This sort of kick-the-can-down-the-road approach to rights is not uncommon in the tech world, and is one that almost uniformly hurts and inures to the detriment of artists and content creators. To my knowledge, the phrase “we did not know if we had the right to use her work, so we paid her for a license before we launched our massive company just to be on the safe side” is one that no tech exec has yet uttered.

Spotify’s defense will likely be to attack Wixen’s standing to bring suit. This technical argument will assert that Wixen cannot bring these claims and that each of the artists — Petty, Cuomo, Young, et al. — must file their own separate claims in order to seek redress. This position is not well-taken, as Section 501(b) of the Copyright Act states “[t]he legal or beneficial owner of an exclusive right under a copyright is entitled” to bring suit. Wixen, as the exclusive licensee of the songs at issue, has a strong claim that it meets this requirement.

The second argument that Spotify will most likely make is more provocative: that a streaming platform like Spotify need licenses at all given that Spotify is neither “reproducing” or “distributing” the music that it streams. While Spotify most likely did reproduce and distribute the songs at issue, proof of reproduction and distribution, while sufficient to establish infringement, is not necessary to do so. Indeed, under 17 U.S. Code § 106, a copyright can be infringed by display or performance of the song, including performance by “means of a digital audio transmission.” It is hard to argue that Spotify does not digitally transmit the songs it streams.

So Spotify’s arguments, even if dressed up in new media and tech trappings and accompanied by Chicken Little exclamations that requiring payments to artists will destroy the internet economy, are most likely losers. And it will be fascinating to see how aggressively Spotify attacks in litigation the very artists whose work its service relies on and celebrates. But even if things get dire for Spotify during this litigation, it should remember one thing — it is not Tidal.

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Scott Alan Burroughs, Esq. practices with Doniger / Burroughs, an art law firm based in Venice, California. He represents artists and content creators of all stripes and writes and speaks regularly on copyright issues. He can be reached at scott@copyrightLA.com, and you can follow his law firm on Instagram: @veniceartlaw.

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