Documents filed in a California court this week show that musician David Lowery, frontman of the bands Camper Van Beethoven and Cracker, is leading a class action of artists who accuse Spotify of knowingly reproducing and distributing their music without permission, and without payment of applicable royalties and fees. Specifically, the artists allege that Spotify failed to properly secure and pay the 'mechanical rights' attached to their songs, which require royalties to be paid for all forms of reproduction (for example, the production of CDs). According to the lawsuit, Spotify's streaming of songs to its 75 million-strong user base constitutes a form of reproduction.

Damages

The lawsuit, filed on December 28 at California's central district court in Los Angeles by law firm Michelman & Robinson, cites statutory damages for copyright infringement ranging from $750 to $30,000 per song. For willful infringement, the damages can be as much as $150,000. Spotify has reportedly set aside as much $25 million to settle royalty disputes, recognising that the streaming service continues to exist in something of a copyright grey area. The potential liability from the current class action, however, could top $150 million. If others join the action, the potential liability is set to rise.

Copyright backlash and royalty disputes are ongoing risks for Spotify. Some, such as Mr Lowery, allege that the company willfully sidesteps its copyright obligations to artists by making music available without proper consultation and consent. Other popular artists, including Taylor Swift and Adele, have refused altogether to make their songs available through the service, arguing that the royalty payments on offer are too low. A popular Christmas track from pop singer Mariah Carey, played a staggering 9.1 million times globally in the week before Christmas Day this year, generated only $66,000 in royalties. For less prolific artists, takings can be meagre.

Unclear obligations

Spotify has defended itself against allegations of willful misconduct. 'We are committed to paying musicians and publishers every penny,' said Jonathan Prince, Spotify's head of communications and public policy. 'Unfortunately, especially in the United States, the data necessary to confirm the appropriate rightsholders is often missing, wrong or incomplete. When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities. Sources: Fortune; The Guardian