Spotify Settles Two Lawsuits Claiming Damages of Over $365 Million
This post is guest authored by Bronte Story, a rising third-year law student at SMU Dedman School of Law. Bronte is one of our summer legal interns here at Maddrey PLLC, and we are happy to present this article. As always, I have reviewed this post for its legal and factual conclusions – Tom Maddrey
Spotify v. Bluewater Music Services and Bob Guadio
The major music streaming service Spotify recently settled two major lawsuits filed by Bluewater Music Services and songwriter Bob Guadio regarding a dispute over mechanical licensing royalties. In a nutshell, “mechanical royalties” are those paid when actual plays of a song are streamed to a user. These suits claimed Spotify did not pay mechanical royalties for songs both Bluewater and Guadio owned the rights to.
Bluewater alleged Spotify infringed on an estimated 2,339 copyrighted works. Ultimately, both the company and songwriter sued Spotify for copyright infringement because Spotify was allowing its users to stream Bluewater’s and Guadio’s music without their permission. A settlement was reached, although the terms are unknown, with a joint motion which postponed the discovery stage of litigation ending the debacle.
Enter the Music Modernization Act
This is likely one of the last lawsuits Spotify will have to settle because Bluewater and Guadio filed in July 2017, about 6 months prior to the litigation cutoff for mechanical royalty claims under the recently enacted Music Modernization Act (MMA). The Act aims to codify copyright law in order to resolve some of the major licensing issues songwriters, performers, and streaming services face and ultimately end a “steady stream of new multi-million dollar lawsuits.” You can read more about the Music Modernization Act in a blog post written by Tom Maddrey HERE.
In the music industry, mechanical licenses are used to license music compositions to then be used on records, streaming services, and so forth. This is used in order to license music which can then be distributed to listeners. Prior to the enactment of the MMA, song rights had to be obtained through a mechanical license for the use of both the music composition and the sound recording (usually owned by the artist) in order for songs to be used to copy and distribute.
The problem is that streaming services like Spotify, Pandora, and Apple Music have not been paying songwriters and other artists the mechanical royalties required by U.S. copyright law and have now offered to pay for a licensing collective that will be created under the MMA that should solve these licensing issues. However, streaming services are not totally off the hook due to the January 1, 2018 filing cutoff for anyone wishing to pursue litigation over royalties against streaming services. For example, Spotify settled with Wixen Music Publishing, Inc. in December 2018 when Wixen sued the company for a whopping $1.6 billion. In addition, Pandora now faces the wrath of Wixen since Wixen recently filed suit against Pandora in June 2019 for using unlicensed lyrics.
Overall, the MMA is aimed to prevent litigation over licensing issues such as the lawsuits brought against Spotify by Wixen, Bluewater and Guadio. However, the settlements may not be over for streaming services like Apple Music, Pandora, and Spotify so long as the suit was filed prior to January 1, 2018.
About the Author
Thomas Maddrey is the founder and managing partner of Maddrey PLLC. Prior to attending law school, Tom was a commercial photographer, entrepreneur, and gallery owner. His work in both the arts and as a business owner has given him a unique perspective on the needs of owners and creatives, as well as an understanding of the obstacles they face.
Learn more about Thomas Maddrey HERE.