Spotify is reportedly being sued by a music production company, on behalf of its clients, for £1.18 billion, in respect of unpaid royalties for songs hosted on its platform. The news comes amid news that Spotify is preparing for a form of initial public offering, a direct listing, later this year.
The Claimant is Wixen, representing a number of musicians including Tom Petty, Janis Joplin, and Neil Young. It claims that Spotify should have obtained copyright licences in respect of both the recording and composition of tens of thousands of songs hosted in Spotify, but that it only obtained licences, and paid royalties, in respect of the recordings.
Spotify has faced law suits relating to its royalty arrangements in the past, paying out millions in compensation on a number of occasions to settle disputes. It reportedly also has two outstanding law suits issued in 2017. It is likely that Spotify will want to tie up any loose ends ahead of a possible direct listing later this year, as any uncertainty brought about by legal claims may dissuade potential investors.
It will be interesting to keep an eye on updates in this story, though it is possible that Spotify will seek to minimise publicity around any settlement.
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