Spotify, the music streaming company, faces a $150 million class action lawsuit led by David Lowery,

Spotify, the music streaming company, faces a $150 million
class action lawsuit led by David Lowery, the frontman for Cracker, the
alternative rock band, and Camper Van Beethoven, an American rock band. The
musicians maintain that Spotify has not been securing the proper licenses for
all of the music it offers and has not been paying royalties to all of the
appropriate parties. The implication emerging from the lawsuit is that the
company that claims to be providing an alternative to online piracy is not
living up to its own legal obligations. In short, it’s a case of copyright
infringement
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Spotify, the music streaming company, faces a $150 million
class action lawsuit led by David Lowery, the frontman for Cracker, the
alternative rock band, and Camper Van Beethoven, an American rock band. The
musicians maintain that Spotify has not been securing the proper licenses for
all of the music it offers and has not been paying royalties to all of the
appropriate parties. The implication emerging from the lawsuit is that the
company that claims to be providing an alternative to online piracy is not
living up to its own legal obligations. In short, it’s a case of copyright
infringement and some might say it involves stealing another person’s
intellectual property. A license for a piece of music involves two separate
copyrights. First is the recording, which is typically owned by the performer’s
label and second is the underlying composition, which is often owned by the
songwriter or his or her publisher. So, to use a recording, a streaming company
such as Spotify would have to get two licenses. This is done by negotiating
with the publisher or by sending the rights holder a notice and paying a
royalty. Lowery claims that Spotify frequently skips the second part. He claims
that there may be hundreds or thousands of artists who have not been paid for
their work including him. Spotify does not argue against this but does say that
tracking down the proper rights holders is a complex process and hard to do.
The company says it has royalties set aside for cases where royalty rights are
not clear, and it stands ready to pay the royalties if the affected artists
make a rightful claim. But, one of Lowery’s lawyers argues that artists should
not have to track down royalties owed them but that it is Spotify’s
responsibility to secure the license and pay the royalty. Spotify, in its
defense, says that the laws and copyright infrastructure that currently exist
do not fully factor in the scope and speed with which digital music services
operate. The company maintains that securing advance permissions for each track
is inefficient and possibly crippling for a company trying to stay competitive.
In January 2016, Spotify was hit with a second lawsuit over the alleged and
systemic and willful copyright infringement.

 Questions

 1. Who are the stakeholders affected and what are the
ethical issues in this case?

 2. Is Spotify justified in saying it is prepared to pay but
claimants will have to come to them and present a rightful claim? Or, does
Spotify have the responsibility to find the artists and secure permission and
pay the appropriate royalty before they stream the music?

 3. How do you evaluate the company’s claim that the system
is too complex and that the laws and copyright infrastructure are the problem
in the digital music industry?

 4. Is the issue in this case that the law is not keeping up
with the high-tech music streaming industry or that Spotify is using this as an
excuse to take short cuts and engage in a questionable practice?

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