$150 Million Class Action Filed Against Spotify

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Cracker and Camper Van Beethoven musician and artists’ rights activist David Lowery has filed a class-action lawsuit in California against the streaming behemoth Spotify, Billboard reports. The suit seeks at least $150 million in damages, arguing that company unlawfully profits from offering material that it hasn’t properly licensed.

There’s little doubt that Spotify’s royalty management system is awry. In a quiet news dump around Christmas, Spotify announced its plans to create a more effective system for identifying rights holders and distributing royalties. Spotify is reportedly in talks with the National Music Publishers’ Association to compile a corrective database. It’s a rare instance of a streaming industry figure complaining that it lacks data.

Billboard cites anonymous industry sources putting the amount of Spotify’s undistributed royalties at $25 million and a source “close to Spotify” putting it closer to $17 million. On his blog, Lowery writes that with Spotify’s announcement the company effectively “admitted to fraud,” a sentiment echoed in his suit.

Lowery’s suit, in essence, says Spotify’s proposed solution to its admitted shortcomings isn’t good enough. The complaint asserts that Spotify has illegally distributed music to 75 million users without attempting to locate the rights holders or utilize alternative compulsory licenses. The proposed class exceeds 100 members and names Lowery, an outspoken critic of the streaming industry via his Trichordist blog, as its representative.

The action seeks a third-party auditor to conclusively identify the unlicensed material, meaning the extent of Spotify’s alleged infringement and its real cost to rights holders could become clear through litigation.