Spotify has agreed plans to create a $43.45 million fund to compensate publishers and songwriters whose music is used without payment of mechanical royalties.
The agreement addresses combined copyright infringement lawsuits from folk singer Melissa Ferrick and David Lowery, frontman of rock groups Cracker and Camper Van Beethoven.
The settlement, which needs to be approved by federal judges in New York, would end lawsuits from the two musicians – Ferrick seeking $200m and Lowery $150m – who had accused the streaming platform of making their music available without securing mechanical rights from the composers. It would also see Spotify pay for subsequent streams of the tracks.
Under existing rules, Spotify has to pay record labels for the use of their recordings and publishers for the related compositions. It pays mechanical royalties directly to publishers and public performance royalties to performing rights groups, which then distribute the money to their member publishers and songwriters.
Alongside past and future compensation, the new settlement details a process by which Spotify and the class counsel “will work collaboratively to improve the gathering and collecting of information about composition owners to help ensure those owners are paid their royalties in the future," according to the plaintiffs’ motion. Problems can arise when recordings enter Spotify’s system without proper data.
In March last year, the National Music Publisher’s Association announced an estimated $30m settlement with Spotify. As part of the deal, the NMPA agreed to release Spotify from liability relater to a group of pending and unmatched works identified by the association.
As of March 2017, Spotify has more than 50m paying subscribers worldwide and is reportedly planning to go public later, most likely by listing on the New York Stock Exchange, this year.
Also this year, the service announced windowing agreements with Universal and Merlin. George Ergatoudis, head of content programming, Spotify UK, told Music Week the Universal deal represented “good news for everyone in the business”.