All The Music You Ever Need

Spotify is subject to another copyright infringement claim. Camper van Beethoven and Cracker frontman David Lowery, as well as Melissa Ferrick (together with other recording artists), brought class actions against the on-demand service seeking a minimum total of $3.5 million in statutory damages. This article provides a summary of the issues and argues that the debate around copyright licenses shouldn’t be narrowed to individual claims. It’s time to legally clear the way for a prospering music market and establish comprehensive data systems with all the information needed to avoid unintentional copyright infringement in the future.

Since that historic moment when music hit the Internet, there’s been no rest for the music business. Recently, Spotify (again) became center of public interest, when Campervan Beethoven and Cracker frontman David Lowery, as well as Melissa Ferrick and other recording artists filed two class actions against the music streaming service seeking at least a total of 350 Million Dollar statutory damages for unpaid mechanical royalties.

Both plaintiffs claim that Spotify “unlawfully reproduces and/or distributes copyrighted musical compositions” in the US market and “profit[s] off its own unlawful conduct” thus committing “wholesale copyright infringement.” Spotify allegedly failed to comply with the rules to obtain a compulsory license, in particular, the service is said to not have notified the songwriters before providing their songs to its users.

Spotify’s response to the claim addressed a well-known issue in the music business – the lack of data. Spotify’s spokesman Jonathan Prince said, “We are committed to paying songwriters and publishers every penny. Unfortunately, especially in the United States, the data necessary to confirm the appropriate rights holders is often missing, wrong, or incomplete.”

To understand the complexity of the conflict it is necessary to have a basic idea of music copyright. In the U.S., each recorded song awards the respective holder two separate copyrights. One covers the musical composition that is the musical work itself. Authors are composers and, if applicable, lyricists. The other one lies in the sound recording embodying the musical composition by fixing a song or other sounds in a tangible medium. Performers as well as engineers or producers of the recording usually hold this kind of copyright. Copyright owners have the exclusive right of reproducing the composition, preparing derivative works and distribute as well as publicly perform or display the song (17 U.S.C. § 106). Licenses can be obtained either directly from the copyright owner or by making use of the compulsory licensing provisions. On-demand services like Spotify need mechanical licenses, covering the reproduction and distribution of musical works on CDs, records, tapes, permanent digital downloads, interactive streams, and public performance licenses to provide their music lawfully to their users.

Traditionally, these rights have been licensed separately. However, with the increasing number of streaming services requiring a thousand of licenses at once, this system became hard to follow up. Whereas a lot of countries around the world managed to offer joined licenses, in the U.S., collective licensing rules were in the way. Performing rights licenses generally are obtained from public performance organizations like ASCAP, SESAC or BMI. Mechanical rights need to be licensed individually.

According to the number of possible participants creating one piece of music, it is hard to track who contributed to a musical work and by what amount. Although there are databases in the U.S. about the ownership of songs, there is no information on which song is incorporated in which recording. Thus, potential licensees are having a hard time figuring out who needs to be compensated for a specific song. Spotify spokesman Prince stated, “When rightsholders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities. We are working closely with the National Music Publishers Association to find the best way to correctly pay the royalties we have set aside and we are investing in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem for good.”

However, even without having a comprehensive database, the U.S. compulsory license system for mechanicals allows the services to submit royalties and papers to the U.S. Copyright Office in case the rightsholder cannot be identified.

Spotify and its opponents have good arguments on each of their sides. Yet, whatever the courts decides – it’s time to clear the way for a prospering music market and establish comprehensive data systems with all information needed to avoid unintentional copyright infringement in the future. In the end, music services and artists pursue the same objective – reaching and entertaining their users or fans. So why not just work together?

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