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Why was a music streaming giant hit with a class action lawsuit?

The online destination of choice for many music fans is Spotify, the cloud-based Swedish music streaming service that provides listeners with access to millions of tracks either free of charge -- with ads and limited services -- or for a monthly fee -- with no ads and enhanced services.

As widely popular as Spotify has become since its launch back in 2008, it's recently been embroiled in a legal dispute with the National Music Publishers Association, the "trade association representing all American music publishers and their songwriting partners" regarding its alleged failure to make royalty payments to artists and secure the necessary licensure to stream music.

In recent developments, it now appears as if Spotify may soon be fighting legal battles on two fronts after David Lowery, the frontman for such notable acts as Cracker and Camper Van Beethoven, filed a class action lawsuit in a federal court just last week seeking upwards of $150 million in damages.

What exactly does the lawsuit allege?

In the complaint, Lowery, who currently teaches at the University of Georgia, accuses Spotify of 1) unlawful distribution of copyrighted material to over 75 million users, 2) failing to issue a notice of intent to secure a compulsory license and 3) failing to identify and/or locate the artists behind the aforementioned copyrighted material for payment purposes.

The complaint also points out how Spotify has already publicized their failure to secure the necessary licenses for music and even proactively set aside millions of dollars in a reserve fund to cover missed royalty payments.

Will the lawsuit be able to proceed as a class action?

While it remains to be seen whether this lawsuit will be certified as a class action, the complaint argues among other things that the proposed class of plaintiffs will easily exceed 100 members and that their individual identities will be easy to ascertain thanks to Spotify's business records. It also argues that a class action is the most efficient and effective manner of resolving the underlying matter.

What types of damages are being sought?

In addition to asking that the court prevent Spotify from engaging in further copyright violations and provide other injunctive relief, the complaint seeks restitution in the form of compensatory damages and statutory damages pursuant to the Copyright Act.  

It will be interesting to see how this matter unfolds and the degree to which Spotify's business is affected by any ongoing litigation.

If you have intellectual property concerns or questions concerning a business law matter, consider speaking with an experienced legal professional who can provide the necessary answers and pursue the necessary solutions.

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