In May, music streaming giant Spotify arrived on a $43.5 Million settlement after a class action lawsuit that involved the company making thousands of songs available without the proper licensing. The final hearing, which occurred last Friday, involved approval of the settlement amount. Although the amount seems like a formidable sum to pay off songwriters and artists, two rights-holders stepped in and claimed the amount was insufficient.
A number of complications were brought up regarding the final settlement. One point was the fact that it is not known how many copyrights the service had violated. An estimate of 300,000 was quoted by Spotify’s defense team, but that comes out to only $100 for each rights-holder. This complicates the process of determining how much money each rights-holder should be given, especially when the number of copyrights varies.
The second complication included unequal or unfair distribution of the settlement. Songwriters whose song has been streamed 0 to 100 times receive a standard minimum payout with those above that limit receiving a proportional share of the remainder.
This could all be sourced to Spotify not having the licensing for the song they streamed even when they had the rights. The company also failed to issue Notices Of Intent with the U.S. Copyrights Office.
Its important to note that Spotify is not the only service with this issue. Several other streaming platforms have made music available without having the proper licensing. This could set a precedent for more lawsuits to develop.
Judge Alison J. Nathan has not yet decided on a final verdict with the statement that she needs more time to decide. If Spotify were to win the lawsuit with the final settlement, other rights-holders could opt out of receiving money and still sue the company on their own. As Spotify is gearing up to launch an Initial Public Offering, the complexity and outcome of the case could turn away potential investors.