Spotify could be in some trouble. $1.6 billion worth of trouble, to be exact. Variety reports that the music streaming giant is being sued by the Wixen Publishing Company for allegedly using thousands of popular songs by major artists without permission or proper compensation.
To understand Wixen's grievance, it's important to distinguish between the music labels (the record companies) and the music publishers. Generally, the labels recruit artists, market their music and videos, and may also handle recording, distribution, and myriad other aspects of music production. Publishers, on the other hand, generally handle the rights to artists' compositions, ensuring the payment of royalties to the composers/songwriters and well as themselves.
Wixen handles publishing rights to songs from a wide variety of artists such as Tom Petty, Steely Dan, Neil Young, the Doors, and Weezer. It filed suit with a federal court in California on December 29, contending that Spotify failed to license its songs, and is seeking $1.6 billion in damages.
This comes after Spotify, by far the leading paid music streaming service, proposed a $43 million settlement to a class action brought by a group of songwriters. Wixen says in its lawsuit that Spotify's proposal doesn't go nearly far enough, and accuses Spotify of disregarding its obligations to publishers in its initial "race to be first to market."
Can Wixen realistically expect to squeeze $1.6 billion out of Spotify? A statement from their president, Randall Wixen, says that what they really want is to talk and work out a long-term agreement. "We’re just asking to be treated fairly," he said. "We are not looking for a ridiculous punitive payment."
Whatever happens, Spotify may have to start cutting up its payments to rights holders with an X-acto knife, parsing microscopic payments among several parties for each stream of "Free Fallin'."
Other artists' works handled by Wixen include those of Janis Joplin, Rage Against the Machine, Santana, and Styx.
That's right, Spotify users could lose the ability to stream "Mr. Roboto."