Spotify had not been a stranger to lawsuits from the music industry. According to Variety, Spotify tried to settle a class-action suit by a group of music Publishers in May to the tune of $43m, but was slammed by multiple artists. This has led to more legal roadblocks against the platform, which had been inching closer to an IPO and reportedly filed classified documents to the SEC, said Axios.
In the suit, Randall Wixen, the publishing firm’s founder and chief executive officer, said that Spotify, in trying to be first-to-market, cut deals with labels with disregard for the artists and songwriters. He said they “made insufficient effort to collect the required musical composition information and, in turn, failed in many cases to license the compositions embodied within each recording or comply with the requirements of Section 115 of the Copyright Act.”
The Copyright Act had seen recent changes in the past couple of months, with the US Congress introducing the Music Modernization Act. The act, if passed, streamlines the entire process of collecting royalties on digital music platforms. Approved by ASCAP and BMI, as well as various record labels and publishers, it would ensure digital services like Spotify, Apple Music and others properly pay songwriters and publishers for their work.
Wixen's lawsuit may hinder Spotify's growth just a bit, but the streaming service's global ambitions continue to rise after a mutual investment with Chinese internet giant Tencent: the two took minority stakes in each others' businesses last month.