In the wake of Spotify’s recent IPO filing, the company that is now worth $19 billion as of last year, has been hit with a $1.6 billion lawsuit. While the company “filed confidentially with U.S. regulators for an initial public offering” that “would allow some longtime investors to cash out” the company went about pursuing an IPO in an unconventional manner [Source: Reuters]. After being recognized for that, Spotify is now going to need to address the issue that lies ahead involving Wixen Music Publishing.
According to Variety, Wixen Music Publishing, who handles titles by Tom Petty, Neil Young, and even Stevie Nicks, is alleging that Spotify is “using thousands of songs without a proper license.” And this isn’t the first time Spotify has been sued. Back in May, the company offered a “$43 million settlement to resolve a class-action suit from a collective group of songwriters, including David Lowery and Melissa Ferrick, that in September was lambasted as being inadequate by a group of songwriter and actors.”
Before Spotify launched in the U.S., it even “attempted to license sound recordings by working with record labels but made insufficient efforts to collect the required musical composition information.” As a result, the company failed many times in “licensing the compositions embodied within each recording as well as neglected to comply with the requirements listed in Section 115 of the Copyright Act.”
Going back to the issue at hand involving the publishing company, had Spotify obtained a direct license from the company or a compulsory license, they would have been permitted to “reproduce and/or distribute the Works as part of the Service, including by means of digital phonorecord deliveries (“DPDs”), interactive streaming, and limited downloads.” Unfortunately, Spotify failed to obtain either license and decided to outsource the role to the Harry Fox Agency. The lawsuit states that Spotify was aware of the fact that the agency “did not possess the infrastructure to obtain the required mechanical licenses and Spotify knew it lacked these licenses.”
Wixen has stated that it would like to sit down with Spotify and work out a fair and favorable settlement. The company claimed that they aren’t looking for a “ridiculous punitive payment,” but just enough so that they feel they are being treated fairly. Spotify is not only known for racking in more than $3 billion in annual revenue, but the company also pays “outrageous annual salaries to its executives and million per month for ultra-luxurious office space in various cities.” It is time the company provides compensation to the artists it owes as these are the individuals who keep the company operating.
How the lawsuit will affect Spotify’s recent IPO filing will likely play out in the coming days and even weeks.