February 10, 2016 | Moira McKenzie

IT might have changed the way the world consumes music, but music giant Spotify is facing the first real threat to its successfully business model with a $150 million legal battle.

American musician David Lowery is suing the service for $150million in damages for unpaid royalties as well as illegal distribution of his songs, which he claims Spotify knowingly and willingly withheld.

In a class action suit, Lowery is arguing that Spotify has unlawfully distributed copyrighted music compositions and has failed to identify or locate the owners in order to pay them in a case being heard in the Central District Court, California.

Since Lowery’s suit, other musicians have stepped forward. American singer/songwriter Melissa Ferrick has accused Spotify of ‘Wholesale copyright infringement’ by failing to license her work and her online royalties.

The court must decide whether or not Spotify has breached copyright laws likely resulting in statutory damages and whether to award compensatory damages to the artists.

What is Spotify?

Spotify is the largest music streaming service connecting listeners to an unlimited playlist, with millions of tracks to pick from.

For a small fee users can subscribed and listen without adds, or stream freely with adds.

Spotify then pays a small amount to the record labels and artists who own the music. Seems like a win, win right?

The consumer is given greater access to music offering an alternative to piracy, where artists are still paid for their work

Is music streaming legal?

Streaming music online isn’t illegal, as long as what you are streaming is legal. Confusing?

What this means is services like Napster or Limewire that allowed individuals to upload files for others to download, is illegal.   This is because the users do not have the right to distribute these files.  Therefore, as the file itself has been illegally uploaded, downloading the file is also illegal.

Services like Spotify or Apple Music however, have obtained permissions from the Artist and Record Labels, therefore offering a legal download to their consumers.

The last decade has seen a change in consumer behavior. We are definitely in a time of living in the now.  We use our smart phones to book cars through Uber, and accommodation on AirBnb. We no longer wait for certain times to watch TV shows, instead use services like Netflix to binge watch a series.  Similarly, we rarely buy CD’S from our favourite artists, instead we download them from Itunes, or more recently legally stream.

Although for the consumer, costs have reduced and efficiency has increased not everyone is winning.

As Spotify is about to announce 100 Million users, for Artists of the music industry this isn’t all good news.

Artists like Adele, Taylor Swift and Cold Play have also publicly snubbed the online streaming service due to low royalties being paid to artists.

And with the latest court action, it could spell more trouble for Spotify.

 

Thanks to our intern Claire Deery for writing this article.