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Judge approves $43m Spotify copyright settlement

Musician David Lowery sued Spotify in December 2015, claiming the streaming service had unlawfully reproduced and distributed songs without obtaining rights owners’ permission. The company was hit with a separate lawsuit by songwriter Melissa Ferrick, before the cases were consolidated.

After the parties agreed on the settlement fee earlier this year, more than 500 musicians and copyright owners objected to the proposed deal, calling it “grossly insufficient”.

On Tuesday, May 22, District Judge Alison Nathan at the US District Court for the Southern District of New York overruled those objections and approved the settlement. She had entered an order of preliminary approval on June 28, 2017.

According to the decision, the class is defined as “all persons or entities who own copyrights in one or more musical compositions (a) for which a certificate of registration has been issued or applied for on or before the preliminary approval date; and (b) that was made available by Spotify for interactive streaming and/or limited downloads during the class period (December 28, 2012 through the preliminary approval date) without a licence”.

Nathan explained that some objectors said the payment by Spotify should be greater.

The settlement agreement included a cash payment of $43.45 million for past streaming, but it also provided a process for class members who had claimed relief to receive ongoing royalties for future streaming.

The settlement will cover any copyright owner whose songs or musical compositions were made available between Dec. 28, 2012 and June 28, 2017. According to the settlement order, there are more than 535,000 potential Class Members.

In late December 2015, the original complaint was filed against Spotify. The Spotify class action alleged that the music streaming service infringed upon copyrights by “[reproducing] and/or [distributing] […] copyrighted musical compositions using Spotify’s streaming service and offline listening service, without identifying and/or locating the owners of those compositions for payment or a notice of intent to reproduce.”

Shortly after the plaintiff filed the suit, Spotify motioned to move the litigation from California to New York where it conducts business.

According to the settlement motion, the recently approved settlement is the second Spotify has paid over copyright infringement issues. In March 2016, Spotify agreed to pay $30 million to the National Music Publishers Association (NMPA) for infringement of their mechanical licenses.

Although this new settlement stands to resolve many allegations against Spotify, the music streaming company still faces litigation.

 

Wixen Music Publishing Inc. represents thousands of songs by Tom Petty, Neil Young, and others, and previously objected to the settlement. The company filed a separate case in December and seeks $1.6 billion in damages for copyright infringement.

Copyright litigation can be risky and troublesome for streaming services such as Spotify, but a new bill recently approved by the House may help streaming services avoid such litigation in the future.

Current copyright law allows digital streaming services to file a notice and then receive an automatic mechanical license. However, many artists argue that streaming services take advantage of the system to avoid paying royalties, resulting in litigation over the issue.

The Music Modernization Act would create a “Mechanical Licensing Collective (MLC)” funded by digital streaming services. The MLC would grant blanket mechanical licenses to the services, allowing streaming and digital downloads.

The bill was unanimously approved by the House and recently received praise from the Senate Judiciary Committee, meaning it will soon be sent for a full Senate vote.

According to the decision, the class is defined as “all persons or entities who own copyrights in one or more musical compositions (a) for which a certificate of registration has been issued or applied for on or before the preliminary approval date; and (b) that was made available by Spotify for interactive streaming and/or limited downloads during the class period (December 28, 2012 through the preliminary approval date) without a licence”.

Nathan explained that some objectors said the payment by Spotify should be greater.

The settlement agreement included a cash payment of $43.45 million for past streaming, but it also provided a process for class members who had claimed relief to receive ongoing royalties for future streaming.

These would be calculated at the statutory rate and “could, depending on the number of claims submitted and the future performance of Spotify’s service, easily total tens of millions of dollars in future royalties for the class”, the settlement said.

Nathan said the objectors “tend to focus on the value of the immediate payment while largely ignoring the future royalty payment programme and the non-monetary benefits that the settlement provides”, so in light of all the benefits, “the amount of the settlement is not unreasonable”.

Other objectors complained that the settlement notice was “unclear or ambiguous or lacked sufficient information”, the judge added. But she again rejected these claims, saying “ultimately, the court concludes that there is sufficient evidence to evaluate the value of the settlement”.

Nathan concluded that the settlement is fair, reasonable and adequate, and gave it her final approval. In addition, she reduced the class counsel’s attorneys’ fees from the originally-sought $15.86 million to $13 million.

Source: www.https://topclassactions.com

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