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Nothing hurts an IP offering like a class-action lawsuit. With that in mind, nearly a year and a half after the class-action lawsuit was filed against Spotify over unpaid royalities, it looks as if it will be settled. According to Billboard, "Spotify has reached a settlement with a group of songwriters who had sued for copyright infringement, eliminating a potential complication to the public offering that the streaming service is planning later this year. According to Billboard "Under the agreement which will need to be approved by the court, the streaming company will set up a fund worth $43.4 million to compensate songwriters and publishers whose compositions the service used without paying mechanical royalties. The settlement addresses putative class actions separately filed in federal court by Cracker and Camper van Beethoven frontman David Lowery and singer-songwriter Melissa Ferrick, which had sought $150 million and $200 million, respectively, and were combined last year."
In December of 2015, we spoke with Lowery about the lawsuit. A big impetus for this suit stemmed from the fact that Lowery discovered songs from his most recent Cracker, album were on Spotify even though they hadn't been licensed. As he told Adland then, companies like Spotify have two options when it comes to legally streaming songs. "They can file what’s called a notice of intention and they automatically get a compulsory license. Or they can come to me directly and try to get a direct license. And (Spotify) did neither of those things. They can get a license for any song as long as they do what section 115 of the copyright act tells them to do. So I was trying to figure out if they had done that and I had somehow missed it."
Lowery realized Spotify hadn't done either. Just like a Youtube video hosting an album, the songs found their way into Spotify's database without proper licensing. Lowery was far from the only artist who discovered this. Independent artists and independent labels were also getting the short shrift. One such label, Victory Records, pulled its entire catalogue over disputed royalties. Melissa Ferrick also filed a class-action lawsuit against Spotify around the same time as Lowery.
While 43.4 million is far from the number sought by the two, it's still a large chunk, and not the first large chunk Spotify's had to pay out, either. In 2016, Spotify settled a lawsuit with the National Music Publishers' Association for close to 25 million over unpaid royalties.