Spotify Was Sued $150 Million For Unpaid Royalties

After a great year of 2015, Spotify received a surprise in the end of the year, as musician David Lowery sued the company over alleged unpaid royalties for $150 million.

Billboard reported that David Lowery, frontman of band The Cracker and Camper van Beethoven with the Michelman & Robinson, LLP law firm has filed a class action lawsuit seeking at least $150 million in damages against Spotify. In the allegation, Lowery said Spotify knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.

Spotify is still in the middle of negotiating settlement with National Music Publishers Assocation for allegation of providing music streaming service without proper license. Spotify was also sued for not making mechanical royalty payments to music publishers and songwriters. Billboard said that according to sources, Spotify has created a $17 million to $25 million reserve fund to pay royalties for pending and unmatched song use.

According to The Verge, Lowery's complaint alleges Spotify causes "substantial harm and injury to the copyright holders" by intentionally failing to obtain the proper licenses for the reproduction and distribution of copyrighted music. In the complaint, Lowery mentioned that Spotify has unlawfully distributed copyrighted music composition to more than 75 million users and failed to pay the owner of the compositions. 

Lowery are not the only musician to sue Spotify. According to TechSpot, the lawsuit is expected to have more than 100 additional members to join the fight, thus granting the suit class-action status.

When the litigation was supported by a community of interest, the lawsuit qualifies as a class-action. A class action suit is much more efficient for plaintiffs and the court rather than individual litigation.

In regard to the lawsuit, Spotify global head of communication and public policy Jonathan Prince said in a statement, "We are committed to paying songwriters and publishers every penny." Unfortunately, Spotify found some data to confirm the appropriate right holders were missing and incomplete. Therefore, Mr. Prince added, "We are working closely with the National Music Publishers Association to find the best way to correctly pay the royalties we have set aside and we are investing in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem for good."

David Lowery formed Camper van Beethoven in 1983 as an indie rock band and disbanded the band in 1990. Lowery then created a new band The Cracker with his old friend Johnny Hickman in 1991. Some of the songs that he listed in the lawsuit are King of Bakersfield, Almond Grove, and Tonight I Cross the Border.