The $43.4-million-dollar settlement offered by Spotify in May to end a class action lawsuit brought publishers and songwriters whose tracks were streamed on the site without prior approval is now subject to a final approval or court rejection, with a decision to come any day.
Spotify’s legal team appeared at a hearing on Friday, December 1 in the U.S. District Court for the Southern District of New York before Judge Alison J. Nathan to argue for the settlement’s acceptance, the steep figure a response to the class-action copyright infringement lawsuit pursued against the streaming giant. While streaming unlicensed content is a widespread practice in the streaming business, the extent of the infringement routinely varies. A lawyer for the putative class has noted the difficulty in identifying the exact number of compositions infringed by Spotify, but Andrew Pincus, a lawyer representing Spotify has offered a “ballpark estimate” of 300,000 songs.
Spotify’s failure to license many compositions leaves an expanse of publishers and songwriters that are consequently owed royalties by the streaming platform. Spotify did possess the recording rights to the compositions, but notably did not license the mechanical rights for the compositions that it would later stream. Spotify additionally failed to issue Notice of Intent (NOI) documents with the U.S. Copyright Office. NOIs alert the Copyright Office of a service’s intent to use and/or distribute the content.
Whereas Spotify’s legal team supported the settlement during the December 1 hearing, two other rightsholders filed objections therein, stating that the settlement number was not commensurate with the damages for each composition. The settlement seeks to award composition writers whose offerings were streamed between zero and 100 times a minimum payment, based on the total settlement number. The remaining money from the settlement would be distributed to other writers and publishers in a pro rata manner.
If Pincus’ estimation of 300,000 infringed tracks holds, then each rightsholder would receive an average of approximately $100 each. The uncertainty shrouding the expanse of material infringed by Spotify renders settlement award dissemination complex.
The deciding judge, Alison J. Nathan has requested more time in the determination of her decision whether to accept the settlement proposed by Spotify, or to reject it, a negation that could engender further litigation. If the settlement is ruled as fair, Spotify still might see many rightsholders opt out of the lawsuit to independently sue Spotify, rendering the streaming platform’s business choices costly expenditures.