David Lowery is leading a class action lawsuit against Spotify for failing on what appears to be a massive scale to do three crucial things: license rights, pay reproduction or “mechanical” royalties for songs it exploits, and fix Spotify’s deeply flawed song licensing and essentially nonexistent mechanical royalty accounting systems for the future. Songwriter and recording artist Melissa Ferrick has separately brought a similar class action.
It’s A Mystery
We now have a legal response from Spotify to give us some idea of how Spotify wishes the world to view its excuse for its massively flawed song licensing practices. And here is what it boils down to–because there has never been a “global rights database” in the history of recorded music, it is just impossible to know who owns what, what any song might actually be given similar song titles, some might be in the public domain, and how the music industry has managed to stumble along for the last 100 years is a mystery of biblical proportions. And oh, by the way–any claim to class membership will be as complex to solve as the Happy Birthday case. Because songwriting is, as Philip Henslowe might say, just a big mystery.
A mystery that justifies massive copyright infringement.
The Ontological Definition of Risk
One might think that the absence of such a database would be a reason that songs did not get exploited at all, for who could ever know anything about anything having to do with a any song?
And since you couldn’t know, that is, because according to Spotify it is an ontological certainty that it is beyond human comprehension to acquire any concrete knowledge of the being and form of any song, anyone wishing to use any songs without a direct license with a robust indemnification would have to be INSANE?
No wait–Spotify’s unspoken conclusion appears to be that because obtaining such knowledge is impossible, then Spotify have done nothing wrong. Meaning everyone should be able to exploit all songs in any way they like without fear of any day of reckoning because it’s all just a mystery. That’s certainly what Spotify did and what they now seek absolution for. Plus–Spotify cites to the U.S. Copyright Office and the National Music Publishers Association to support this very argument. (Which of course is in the category of what a great man once called “pure applesauce” or as a less great man said, pure unadulterated “Fancy” Grade Bullshit.)
So what makes bullshit “Fancy”? Spotify’s lawyers actually do an excellent job of revealing the contours of the business risk that Spotify intentionally undertook when they launched the company in their biggest market. Because the obvious conclusion one comes to in reading this parade of horribles is that knowing all these risks, Spotify did it anyway.
And that’s the part where the lawyers don’t do such a great job. They never once call the Court’s attention to Spotify’s public statements about accruing royalties for unlicensed songs. Because it seems that the lawyers are actually arguing against their client’s public position–if Spotify can accrue royalties for songs they know are not licensed (setting aside the question of how they even know what rate to accrue royalties at for unlicensed songs), then how can it be that Spotify has no way of knowing which songs are unlicensed based on the lawyers’ parade of horribles? According to Spotify:
When one of our listeners in the US streams a track for which the rightsholder is not immediately clear, we set aside the royalties we owe until we are able to confirm the identity of the rightsholder. When we confirm the rightsholder, we pay those royalties as soon as possible.
So at best these songs are “known unknowns”–Spotify knows that it doesn’t know who owns the song. That precludes a direct license for the known unknown (otherwise the song would be a known known), and probably means that Spotify did not send in the unknown copyright owner NOI to the Copyright Office. Of course, that also means that Spotify knows that it exploited the song without a license…which is kind of the point of this whole thing, right?
So which is it–Spotify knows which songs are not licensed and are accruing royalties at some theoretical rate (to the tune of millions of dollars according to press reports), or song ownership is such a mystery that such an accrual is not capable of mortal knowledge?
Don’t you think the Court might want to know about that accrual part? From Spotify’s lawyers? Or do you think that if they raised it the Court might be confused by that A and Not-A business?
Spotify has told us that they intend to pay every penny they owe and they have accrued royalties for songs for which they have no licenses. That means they know which songs they have been using and for which they have accrued royalties. Now that Spotify has been called out, rather than publishing a list of these songs, Spotify tries to hide behind the lack of some unicorn database to excuse their bad behavior. A unicorn database that has never existed.
Because if the situation really was as dire as Spotify would have you believe, then how could they ever believe that any license they ever get for anything is real, that it actually represents anything more than a flickering shadow on a cave wall? So why pay anyone anything ever?
When the Going Gets Tough, the Tough Get Fancy
And this is where the bullshit gets really fancy. Because whatever the Copyright Office, NMPA or anyone else said about the desirability of the unicorn database, they never said that their general comments about the general state of things that would be nice to have supported the theory that Spotify could feast on the creative output of generations of songwriters without licenses or compensation.
These cases are of particular interest because they expose both Spotify’s hypocrisy and the potentially fatal flaw that streaming music boosters simply do not want to acknowledge–streaming services are in such a mad rush for IPO riches that they have little idea what music is or is not licensed. Spotify’s hypocrisy because it has from the beginning tried to mask its craven greed in the mantle of saving the music business from piracy like the Big Bad Wolf in grandma drag.
To put this in perspective, estimates in the press are that Spotify has failed to license or pay royalties for at least 10% of the total number of songs that Spotify offers on its service, and some estimates are as high as 25%.
Before you blow that off as a small percentage realize the number of songs that Spotify is distributing–some 30 million songs with daily increases of tens of thousands. So that means that Spotify has failed to license about three million songs at a minimum.
Three million songs. This is copyright infringement on a massive scale, a scale so large that it sounds…well, what would you call it? Certainly big enough that it overwhelms the ability of any one songwriter to effectively bring the law to bear.
The Better to Stream You With, My Dear
This is the kind of scale that one would expect the government to get involved with.
At least you might expect the government to get involved if you thought that songwriters should expect at least as much protection from their government as do their cousins amongst the primates, amphibians and fowl, not to mention the land itself. For it is undeniable that the brown pelican, the snail darter, the desert tortoise and even wetland marshes get greater protection from the U.S. government than songwriters. Or as an afternoon hanging around committee rooms of the Texas Legislature will show you, hogs have more lobbyists than artists.
So if you’re asking yourself why David Lowery and Melissa Ferrick have to sue Spotify for massive failures to comply with the law instead of the government, there’s a simple explanation.
Songwriters are just the wrong species. Ask BP what happens when you pull that kind of thing on a brown pelican.
So make no mistake–that’s why the songwriters have to take care of what should be the government’s problem. And that’s some pretty fancy bullshit.
By Chris Castle
[Thank you to Steve Garvan, http://www.garvanmanagement.com, for contributing this article.]# # #
ANOTHER TAKE ON THE SPOTIFY / LOWERY SUIT
SPOTIFY ATTEMPTS TO DISMANTLE CLASS ACTION SUIT OVER ROYALTIES IN NEW FILING
Spotify has responded to a lawsuit filed in December by Camper Van Beethoven and Camper frontman David Lowery, who is seeking $150 million in damages from the streaming service over alleged willful copyright infringement by the company. Lowery’s suit arrived on Spotify’s doorstep just days after the company announced plans for a database to manage publishing royalties. That announcement came some months after Spotify removed the catalog of Victory Records after the label’s publishing arm, Another Victory, claimed the service had failed to pay for 53 million streams of its songs.
Spotify’s response to Lowery, filed on Feb. 12 by Mayer Brown LLP, enumerates the many problems with record-keeping in the record business (a topic that Spotify itself addressed when announcing its formation of a publishing database, and which continues to generate significant debate in the industry) in an attempt to dismantle the suit’s class action certification. On the question of whether those eligible to participate in the class action could be identified, the filing reads:
… having a list of sound recordings streamed on Spotify’s service is not enough for Plaintiff or the Court (or, for that matter, Spotify) to identify the corresponding underlying musical works, let alone their owner(s). Just one of the many difficulties that arise is when multiple songs have the same name. For example, if the list includes a recording called “Hello,” that is not enough to figure out if the composition on the recording is the megahit by Adele, the classic by Lionel Richie, or other songs called “Hello” by Evanescence, Ice Cube, and many others. Would “California Girls” mean the song by the Beach Boys or the Katy Perry hit? Would “One” refer to the song by U2, the show tune from A Chorus Line, or one of many others, including hits by the Bee Gees and Metallica?
The crux of Spotify’s filing is that a class action suit over copyright violations requires such specific knowledge of each copyright infringement, much less each songwriter eligible to participate, that the suit runs afoul of the federal rules of civil procedure, which say that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Spotify contends that the information required for determining whether the company was in the wrong for any given infringement is specific to that song and/or recording. As well, Spotify’s lawyers contend that defining members of the proposed class is not administratively feasible for a catalog of 30 million-plus songs.
The company also references the win by Flo & Eddie against SiriusXM over royalties related to songs recorded prior to 1972, pointing to that case’s class action certification as being correct in order to cast Lowery’s own in sharp relief.
In that case, the court concluded that Sirius had engaged in an undifferentiated, across-the-board approach of not seeking any licenses and not paying any royalties for pre-1972 works. Given that fact, the court concluded that the central common issue was whether Sirius was correct as a matter of law that no licenses were legally required.
Spotify filed a separate document seeking to move the case from California to New York, where it maintains its U.S. headquarters.
According to Billboard sources, another class action suit against the streaming service over royalties is in the planning stages as well.
By Andrew Flanagan
http://www.billboard.com/biz/articles/news/legal-and-management/6875479/spotify-attempts-to-dismantle-class-action-suit-over
[Thank you to Alex Teitz, http://www.femmusic.com, for contributing this article.]
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APPLE MUSIC CONTINUES FURIOUS RATE OF GROWTH
At its current pace of growth, Apple Music will easily have attracted 20 million subscribers by the end of 2016.
The streaming music service has added a million paying subs in the past month, according to Apple SVP Eddy Cue.
We learned that Apple had clocked up 10m subscribers in early January – a figure later confirmed by CEO Tim Cook to investors.
“We shared the incredible Apple Music experience with even more listeners, with over 10 million paying subscribers less than four months since customers began paying for the service,” noted Cook in Apple’s Q1 earnings call last month.
Now, little over four weeks on from the point that milestone was surpassed, Cue has confirmed that Apple Music has breached 11m subs.
“I live in a world where all of my music is in the cloud, and we’re going to see more and more customers [think the same],” said Cue.
“We just passed 11m Apple Music subscribers, and all of those people live in a world where music is in the cloud.” (MBW)
Discussing Apple Music’s user growth, Cue commented: “We’ve been very pleased. Just this past week we introduced it in Taiwan and Turkey, we [recently] introduced a version for Android…
“One of the things we’ve learned is that we have to educate people. As much of all of us know about music subscriptions, when you go around the world, what does it mean have access to all of the music [ever made]?
“That’s something we’re doing a lot of work on right now. We noticed that a lot time, people didn’t understand the concept: ‘What do you mean I pay $9.99 [ a month]? What do I get?’ That’s been a big part of moving the number forward.”
Eddy Cue is onto something.
Industry insiders tell MBW that the official worldwide paid music subscriber figure ticked up over 50m in 2015, an increase from the 41m stat the IFPI confirmed for 2014.
Here’s a slightly unfair take on that number, but one that speaks volumes: 50m people equates to just 0.7% of the world’s population.
Here’s a slightly unfair take on that number, but one that speaks volumes: 50m people equates to just 0.7% of the world’s population.
As MBW reported last week, Apple’s resources have allowed it to tackle this level of global opportunity/ignorance head-on, in a manner which loss-making Spotify simply doesn’t have the cash to facilitate.
Since first arriving on June 30 last year, Apple Music has launched in 113 countries. It’s now available in 59 markets in which Spotify is not – including Russia, China, India and Japan.
Clearly, Cue is feeling bullish about one big advantage of Apple Music versus most of its competitors, Spotify included – the ability for users to upload their own music into a cloud locker and access these tracks from multiple devices.
“You’re seeing Music make that transition now,” he told the podcast. “Music before was very local, it really didn’t live in the cloud. You moved your content to a device locally.
“This is about all of your music, no matter how your acquired it. If it doesn’t exist in the subscription service, if you bought it yourself or it’s available as a bootleg – all of the things you consumer [as] music.”
(“No matter how you acquired it.” What could he be referring to?)
The Apple Music app arrived on Android in November last year – the first ever frontline Apple app to do so.
Apple has just prevented free users of Apple Music being able to access the platform’s curated radio stations, although they can still listen to Beats 1 without paying anything.
Other revelations made by Cue and his fellow guest, SVP Craig Federighi , on the podcast included the fact that Apple’s iCloud service now reaches 782m users, while the App Store and iTunes handle 750 million transactions every
[Thank you to Steve Garvan, http://www.garvanmanagement.com, for contributing this article.]