Music publishing company Wixen sues Spotify for $1.6 billion

When it comes to reporting on Spotify and the company’s strained relationship with songwriters and publishers, it’s beginning to sound like a broken … system. But a possible fix is in.

Just two days before New Year’s Eve, the music publishing company Wixen, which manages the compositions of a wide cross section of artists from Neil Young to Rage Against The Machine, filed a lawsuit against Spotify over its failure to properly license those works before making them available to stream.

The new lawsuit is not the first (or the second or the third) brought against the world’s most popular streaming service over compositions, which are legally discrete from recordings and require a separate license (a “mechanical”). In fact, Wixen’s action is directly related to a $43 million settlement that Spotify struck six months ago over a largely identical suit against it that it hoped would sunset further court battles.

“Unfortunately, the Ferrick settlement,” reads Wixen’s complaint, referring to that agreement last year, “is still grossly insufficient to compensate songwriters and publishers for Spotify’s actions, as well as procedurally unjust.” It seeks a “total statutory award of at least $1.6 billion.” That language closely mirrors that of another legal action, brought against Spotify one month after the Ferrick settlement was announced.

The timing of the suit is inauspicious for Spotify — Wednesday it reportedly filedpapers with the SEC for an initial listing on the New York Stock Exchange some time in the first half of this year.

While the reason for the suit isn’t new, the reason for its as-late-in-the-year-as-you-can-get filing is. If that settlement didn’t quite protect Spotify against lawsuits like Wixen’s (songwriters and publishers can opt out of the Ferrick deal) then a new piece of legislation will — and it’s the reason the company is going after Spotify now.

On Dec. 21, 2017, Republican Rep. Doug Collins of Georgia introduced that new piece of bipartisan legislation, which makes sweeping changes to the labyrinthine licensing system for compositions that has left many songwriters in the lurch and tech companies on the hook. It would also prevent lawsuits like Wixen’s from being filed.

“It’s the Music Modernization Act, and the Jan. 1 deadline it imposes forced our clients’ hands,” Daniel Schacht of Donahue Fitzgerald LLP, the firm handling Wixen’s case, tells NPR of the Dec. 29 filing.

“We’ve been working on this now for a little over 4 1/2 years,” Collins said in an interview with NPR conducted on Dec. 20. “We’re trying to provide a way so that [digital services] can provide the music they want to, have a safe haven where they can match the royalties, where the songwriters can also benefit — that they can get fairly compensated. It’s really is a product of a lot of hard work to reach a consensus. I have to admit, there were times during the journey that I would have — that I’d just throw up my hands and not find the answer.”

The Music Modernization Act establishes, among many other things, what tech companies, songwriters and publishers have needed but failed to create for some time: a central database that identifies which songwriter and/or publisher controls which composition.

– Excerpt from article for NPR by Andrew Flanagan. See the full article here.