A major music publisher has filed a lawsuit against Spotify in California federal court, seeking $1.6 billion in damages for allegedly using songs without acquiring the necessary licenses and failing to provide proper compensation.
The legal action comes at a bad time for Spotify, which is expected to go public later this year.
Wixen Sues Spotify For $1.6 Billion
Wixen Music Publishing, which holds the rights to songs of major artists that include The Doors, Santana, Neil Young, Tom Petty, Zach De La Rocha and Tom Morello of Rage Against the Machine, Steely Dan's Donald Fagen, and Stevie Nicks, among many others, claimed that Spotify is streaming tens of thousands of tracks without licenses and compensation.
"While Spotify has become a multibillion dollar company, songwriters and their publishers, such as Wixen, have not been able to fairly and rightfully share in Spotify's success, as Spotify has in many cases used their music without a license and without compensation," the lawsuit said.
The lawsuit added that while Spotify initially tried to work with the record labels, the streaming service cut corners in the interest of being the first to market.
Wixen questioned the permission for Spotify to stream a total of 10,784 songs. The music publisher is seeking the maximum of $150,000 in copyright damages for each song, leading to the sought award of $1.6 billion.
Wixen's lawsuit follows Spotify's agreement in May to an over $43 million settlement to a proposed class action lawsuit from songwriters over the same issue. Wixen said that the settlement was "grossly insufficient."
The music publisher was also spurred to launch the lawsuit after the Music Modernization Act was introduced in mid-December. The bill will make it simpler for music streaming services to acquire licenses and improve royalty payments to song copyright owners, but Wixen believes that it will prevent the collection of past due payments.
Spotify To Go Public This Year
Spotify, which has 60 million subscribers, may be valued as high as $20 billion once it goes public later this year. The music streaming service, however, will take the route of a planned direct listing on the New York Stock Exchange instead of the usual IPO.
In advance of going public, Spotify has publicly prioritized finalizing contracts with record labels. The music streaming service has also moved to improve its relationship with the industry's three major labels, namely Sony, Universal, and Warner, and entered a deal with the rights agency Merlin, which handles most independent record label licensing.
With the massive lawsuit from Wixen, Spotify has another hurdle to clear if it wants the company to go public without any major issues chasing it.