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Business News Digital Legal
Rhapsody targeted with mechanicals lawsuit as Spotify reportedly tries to negotiate a settlement
By Chris Cooke | Published on Tuesday 8 March 2016
Yeah, what about Rhapsody, everybody? They’ve been streaming the tunes for ages. Long before your Spotifys and your Slacker Radios and your Google Plays, Rhapsody was there, diligently providing the streams to any music fans who’d consume. Both of them. So why have they been left out of the mechanical rights litigation party? They were first to market, so really should have gotten their writ before everyone else. I mean, even fictional streaming service Tidal has been sued. What about Rhapsody?
Well, worry not, people, because David Lowery’s got that covered. Rhapsody is the latest streaming service Stateside to be sued over allegedly unpaid mechanical royalties due on the songs it has been happily streaming all these years.
As with Lowery’s lawsuit against Spotify, and other litigation targeting Slacker Radio, Google Play and Tidal, Rhapsody is accused of not complying with the formalities of the compulsory licence that covers mechanicals in the US, and therefore of infringing the copyrights of a multitude of songwriters.
Digital Music News published a copy of the latest mechanical rights lawsuit last night. As with the previous legal action launched by musician and vocal artist rights campaigner Lowery, law firm Michelman & Robinson are leading on the Rhapsody litigation. Though, DMN notes, this new case has an added element.
Since these lawsuits started landing, the company used by many streaming services to manage (or, possibly, mismanage) mechanical licensing, the Harry Fox Agency, has seemingly started sending back-dated notices of intent to copyright owners, ie the key bit of paperwork required by the aforementioned compulsory licence.
But that bit of catch up work by HFA may well be now used by lawyers representing songwriters like Lowery as evidence that the streaming services knew all along that they were infringing a plethora of copyrights. And plaintiffs in these cases need to show that infringement was “wilful” if they are going to push for the highest possible damages of $150,000 per song used without licence.
Meanwhile, as the pile of mechanical rights lawsuits starts to pile-up, behind the scenes various bigger music publishers are apparently trying to negotiate an out-of-court settlement with Spotify. It would attempt to halt the onslaught of new litigation in return for a more formal version of the commitment the streaming service made last year to set up a big fat database that, once and for all, would identify what songs appear in what recordings (by linking the ISRC codes that identify recordings to the ISWC codes that identify songs).
It remains to be seen how any such deal is structured, and whether it placates the wider songwriter community. DMN says America’s National Music Publishers Association – which Spotify already said was assisting in its grand database plan – is involved in the deal making.
A settlement will be attractive to many stakeholders. All the mainly loss-making streaming services will want to limit their liabilities in this domain, and Spotify really needs to clear up this mess before any IPO.
Meanwhile, despite all the noise, many in the music publishing sector are also keen to put these disputes behind them – without any high profile and potentially embarrassing court cases – so to let the premium streaming services get on with growing their businesses, while the collecting societies and trade bodies take on the safe harbour-exploiting free platforms like YouTube.
In terms of finding a way to ensure mechanical royalties are paid more efficiently, well, given publishers and collecting societies have managed just that in every country other than the US, you have to think there is a solution out there somewhere. Though whether the major publishers and NMPA can talk streaming critics within the songwriter community to put the brakes on their class action lawsuits remains to be seen. That may be more tricky.
