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LAWSUIT

Sweden’s Spotify hit by new $200 million action

Swedish music streaming leader Spotify has been hit by a new copyright lawsuit seeking $200 million, in the second such case within weeks.

Sweden's Spotify hit by new $200 million action
The Swedish company has been accused of adopting "a now familiar strategy for many digital music services -- infringe now, apologize later." Photo: Erik MÃ¥rtensson / SCANPIX

The lawsuits, each filed by individual artists in a US federal court in Los Angeles, ask a judge to create a class-action suit in which other alleged victims can collectively seek damages.

The latest lawsuit was filed Friday by Melissa Ferrick, the Massachusetts-based indie folk singer who teaches at the prestigious Berklee College of Music and rose to prominence as Morrissey's last-minute opening act on his 1991 tour.

Ferrick accused Spotify, which boasts of providing a massive selection of on-demand music, of failing to inform copyright owners when it created phonorecords, the files used to provide the instant music online.

Ferrick charged that the Swedish company, not wanting to delay its growth including its US launch in 2011, took “a now familiar strategy for many digital music services — infringe now, apologize later.”

“Spotify chose expediency over licenses. Thus, while Spotify has profited handsomely from the music that its sells to its subscribers, the owners of that music (in particular, songwriters and their music publishers) have not been able to share in that success because Spotify is using their music for free,” the lawsuit said.

Ferrick said that her songs have been streamed or temporarily downloaded one million times in the past three years over Spotify but said the company did not license them as required.

Ferrick's lawsuit sought at least $200 million on behalf of copyright holders from Spotify, a private company which says it has more than 75 million users and has been valued at $8 billion.

Spotify was hit in late December by another lawsuit seeking a class-action suit filed by David Lowery, the leader of alternative rock bands Cracker and Camper Van Beethoven who is also an academic.

Lowery, whose lawsuit sought at least $150 million, also accused Spotify of failing to seek permission for copying or distributing songs.

His lawsuit had a slightly different argument, accusing Spotify of ignoring mechanical rights — the permission to reproduce copyrighted material.

In response to Lowery's lawsuit, Spotify said it was trying to compensate every rights holder but that data was often missing.

“We are committed to paying songwriters and publishers every penny,” Spotify spokesman Jonathan Prince said at the time.

Spotify says it has paid back $3 billion to music-makers, has set aside money for future payouts and is working to find technical solutions to avoid future problems.

Streaming, both on Spotify and competing services such as Apple Music and Tidal, has been rapidly growing and contributed to a net rise in music consumption in the United States last year.

BUSINESS

Spotify reports strong growth in users as it announces price rise

Spotify on Tuesday reported a bigger-than-expected rise in active users at the end of the second quarter, a day after the music streaming giant announced price increases for its premium service.

Spotify reports strong growth in users as it announces price rise

The Swedish company, which is listed on the New York stock exchange, said it’s total active users rose 27 percent to 551 million year-on-year, or 21 million more than it expected. The number of paying subscribers also rose, with a 17 percent jump to 220 million — three million more than expected.

On Monday, the company announced it was raising its prices for premium subscribers “across a number of markets around the world,” following in the footsteps of similar moves by competing music services from Apple and Amazon.

Despite the boost in users, Spotify reported a bigger operating loss of 247 million euros ($273 million) in the second quarter, compared to a loss of 194 million euros for the same period a year earlier.

The company said it was “primarily impacted by charges related to our actions to streamline operations and reduce costs.”

In early June, Spotify announced it would be cutting some 200 positions working with podcasts.

That move came after a January announcement that Spotify was cutting around 600 jobs — equalling about six percent of its workforce — following similar moves by other tech industry giants.

Spotify has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as
podcasts. It has invested over a billion dollars into podcasts alone.

In 2017, the company had around 3,000 staff members, more than tripling the figure to around 9,800 at the end on 2022.

The company has never posted a full-year net profit and only occasionally quarterly profits despite its success in the online music market.

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