All the services will have to address this issue, according to David Lowery.
On Friday (May 26), Spotify reached a settlement in a putative class action lawsuit, consolidated out of two lawsuits brought by Melissa Ferrick and David Lowery, involving songwriters and publishers whose compositions the service streamed without a license. The settlement, which still needs to be approved by the court, calls for Spotify to set up a $43.45 million fund to compensate rightsholders for past infringement, and allows the company to put behind it a potential obstacle to an initial public offering expected to come later this year.
The deal could be a win for both sides. Since it’s an opt-out settlement, songwriters and publishers who own works registered with the U.S. Copyright Office are assumed to be included unless they say otherwise -- which means that Spotify will reduce its risk of future lawsuits. The publishers and songwriters in the class will share in the $43.4 million fund, which will be divided up according to a formula based on the number of times a work was streamed. The information submitted by class members will become part of a database that Spotify uses to pay royalties in the future.
No one knows how much money will be collected by individual songwriters and publishers, since no one knows precisely how many compositions Spotify didn't license, or how many of them are registered with the Copyright Office. But rightsholders will almost certainly collect more than they would have if Spotify had been paying the statutory royalty rate, says Henry Gradstein, a partner at Gradstein & Marzano who served as interim co-lead counsel for rightsholders along with Susman Godfrey partner Steven G. Sklaver. In March 2016, the NMPA reached a private settlement with Spotify for an estimated $30 million.