Pro Music Rights Sues Spotify For Failed Royalty Payment

On November 25, plaintiff Pro Music Rights filed a complaint against Defendant, Spotify (Pro Music Rights, LLC and Sosa Entertainment LLC v. Spotify AB, Spotify USA, Inc., Spotify Limited, and Spotify Technology S.A. 2:19-cv-00843-JES-NPM) for monetary damages caused by Spotify’s failure to pay for the millions of streams of music on its platform Pro Music Rights and Sosa Entertainment represent. The plaintiffs are represented by Gora and Colosseum Counsel in the lawsuit filed in the United States District Court for the Middle District of Florida.

Pro Music Rights (PMR) is a “public performance rights organization representing over 2,000,000 works of artists, publishers, composers and songwriters.” PMR relies on streaming services like Spotify to grow and maintain its business, thus Spotify’s alleged refusal to pay PMR would hurt PMR’s business. “PMR is a for-profit performing rights organization that collects license fees on behalf of…whom it is affiliated and then distributes the license fees as royalties to those affiliates whose works have been publicly performed.”

The complaint stated that “in or about May 2017, Spotify removed all of Plaintiffs’ songs from its digital music streaming platform – commonly known as ‘Spotify’ – without advance notice… without ever providing Plaintiffs with an opportunity to cure whatever the reason for removal, and without adhering to the rules, procedures, policies and obligations to which Spotify holds itself out to the public.”

The complaint alleged that Spotify has not paid the full royalty for the 550,000,000-plus streams of PMR’s songs on Spotify. Spotify removed all songs, a blanket ban, instead of the songs that were over-played. Further, the complaint claimed Spotify’s actions are a result of its equity deal with Music and Entertainment Rights Licensing Independent Network (Merlin), of which Sosa is a member; therefore, Sosa was entitled, as part of its contract with Merlin, to receive equity in Spotify. They argue that this was a move by Spotify to pressure Merlin to remove Sosa from the equity deal and it worked. Spotify stated that large stream counts are from mostly unknown individuals and do not generate the same revenue for Spotify as advertisements, and mainstream acts, and it, therefore, does not have to pay the royalties as about 99 percent of the streams were from its free ad-supported version. Additionally, Spotify’s cumulative net losses for the past four years, 2015 to 2018, have exceeded $2 billion. When Spotify went public in 2018, Merlin sold its Spotify shares and benefitted financially, however, PMR and Sosa have suffered financially.

Overall, the complaint alleged: “(i) Spotify fabricated a reason to remove Sosa’s songs from its platform, (ii) Spotify removed those songs to avoid having to pay royalties for reasons having nothing to do with Sosa, (iii) Spotify communicated false statements to Merlin about Sosa, its songs, its artists, its members and its business, and (iv) Merlin, as a result of Spotify’s false statements, wrongfully terminated its relationship with Sosa. At the end of all this, Plaintiffs received nothing, but they should have received tens of millions of dollars through, among other things, Sosa’s membership in Merlin.”

Moreover, though Spotify removed the songs, PMR and Sosa’s songs continue to play without license or royalty through Spotify-generated playlists. However, Spotify is legally obligated to pay royalties for streamed music.

PMR has sought monetary damages to compensate for injuries caused by Spotify’s failure “to fulfill its duties and obligations as a music streaming service,” the willful removal of content for anticompetitive purposes, unfair and deceptive business practices and engagements, the elimination of PMR’s contracts and expectations and its refusal to pay royalties and publicly performing songs without a license. PMR has sought over $1 billion from Spotify for unfair and deceptive trade practices and copyright violations for refusal to pay royalties for more than 550,000,000 music streams.