Spotify and Wixen Music Publishing which sued the streaming giant late last year for a headline-grabbing $1.6 billion announced today that they have settled the lawsuit. According to the announcement, “The conclusion of that litigation is a part of a broader business partnership between the parties, which fairly and reasonably resolves the legal claims asserted by Wixen Music Publishing relating to past licensing of Wixen’s catalog and establishes a mutually-advantageous relationship for the future.”
While terms of the deal were not disclosed, a source close to the situation told Varietythat, not surprisingly, the settlement amount was well short of $1.6 billion. If it were, as a public company Spotify would be obligated to disclose it per SEC rules, which suggests a 5% threshold (e.g. the impact of the event is 5% or more of revenue, earnings, etc) as a starting point.
In the lawsuit, Wixen, which handles titles by Tom Petty, Neil Young, Steely Dan’s Donald Fagen, Weezer’s Rivers Cuomo, Stevie Nicks, and others, alleged that Spotify was using thousands of songs without a proper license and sought damages worth at least $1.6 billion and injunctive relief.
“Prior to launching in the United States, Spotify attempted to license sound recordings by working with record labels but, in a race to be first to market, made insufficient efforts 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.
Despite the size of the damages, Wixen signaled a willingness to settle in its first statement. “We’re just asking to be treated fairly,” president Randall Wixen said. “We are not looking for a ridiculous punitive payment. But we estimate that our clients account for somewhere between 1% and 5% of the music these services distribute. Spotify has more than $3 billion in annual revenue and pays outrageous annual salaries to its executives and millions per month for ultra-luxurious office space in various cities. All we’re asking for is for them to reasonably compensate our clients by sharing a miniscule amount of the revenue they take in with the creators of the product they sell.”
In Thursday’s announcement, Wixen said, “I want to thank [Spotify cofounder and CEO] Daniel Ek and [Spotify General Counsel and VP, Business & Legal Affairs] Horacio Gutierrez, and the whole Spotify team, for working with the Wixen team, our attorneys and our clients to understand our issues, and for collaborating with us on a win-win resolution. Spotify is a huge part of the future of music, and we look forward to bringing more great music from our clients to the public on terms that compensate songwriters and publishers as important partners. I am truly glad that we were able to come to a resolution without litigating the matter. Spotify listened to our concerns, collaborated with us to resolve them and demonstrated throughout that Spotify is a true partner to the songwriting community”
“We’d like to thank Randall Wixen and Wixen Music Publishing for their cooperation in helping us reach a solution,” said Gutierrez. “Wixen represents some of the world’s greatest talents and most treasured creators, and this settlement represents its commitment to providing first-rate service and support to songwriters while broadening its relationship with Spotify.”