Spotify settles its class-action songwriter lawsuits

As Spotify prepares to go public, it has removed one of the key obstacles to that process: the combined class-action lawsuits filed by musicians David Lowery and Melissa Ferrick on behalf of songwriters. The lawsuits originally sought $150m and $200m, but the settlement will see Spotify paying just under $43.5m as well as administration and notice costs of $1m-$2m.

“The Settlement further provides that Class Members can receive substantial assistance through the use of the Spotify Track Database and a Settlement Claim Facilitator in determining which of their compositions may be embodied in Spotify tracks streamed during the class period,” explained the settlement filing.

“Additionally, the Settlement Agreement sets forth a process for Class Members who have claimed past relief to automatically receive ongoing royalty payments calculated at the statutory rate from Spotify for future streaming which could, depending on the number of claims submitted and the future performance of Spotify’s service, easily total tens of millions of dollars in future royalties for the Class.”

Among the other elements of the settlement, as revealed in the filing, are for Spotify to “establish an audit procedure for Class Members to verify the accuracy of Spotify’s royalty payments” while also working with the plaintiffs to further improve its mechanical-licensing processes, and setting up a ‘Best Practices’ group to bolster that work. The settlement clears one legal headache out of the way of Spotify’s path towards a public listing, but in the long term, those efforts to tackle the problems with mechanical licensing should also be good news for songwriters.

Settlement filing link – http://tinyurl.com/ybrv5n3r
Source: Billboard – http://tinyurl.com/ycgqm2vz