Lyric aggregator LyricFind has filed an explosive antitrust lawsuit against its main competitor Musixmatch, which - it alleges - entered into an expensive exclusivity deal with Warner Chappell in order to hinder its competitors’ access to market. And, more specifically, to scupper a possible deal between LyricFind and Spotify, the biggest customer for lyric aggregation services.
There was “no legitimate business justification” for the exclusivity deal, LyricFind insists, and the entire arrangement was simply an “anticompetitive scheme to protect, maintain and increase Musixmatch’s monopoly”.
Announcing the litigation, LyricFind founder Darryl Ballantyne says that his company has spent the last 20 years operating in an ever evolving and increasingly competitive business providing lyrics to digital platforms. That “competitive atmosphere”, he adds, “led to more money for rightsholders and a better experience for music fans”.
However, he adds, Musixmatch and its private equity owner TPG Global are now engaging in “certain tactics that we believe are destroying the market we all love for their own financial gain”. Those tactics, he claims, are forcing streaming services to work with Musixmatch even if they can negotiate better terms with a rival.
Which is bad news for the streaming services, for LyricFind and, it reckons, independent songwriters and music publishers too. As a result, Ballantyne concludes, “we are taking action now to protect every music streaming service’s right to partner with the lyric provider of their choice”.
When streaming services display lyrics within their apps, they need separate licences to those that allow them to actually stream the music. That created an opportunity for lyric aggregators like LyricFind and Musixmatch.
Partly because of the usual complexities around song rights, where copyrights are commonly co-owned, especially as publishers rather than collecting societies generally lead on lyric licensing. But also because most publishers aren’t in a position to actually provide the lyrics in a compatible digital format.
That means the aggregators need to do two things, first secure the rights to license lyrics from the relevant music publishers and then build systems to actually deliver the content. Generally to date all lyric aggregators have secured rights from the same publishers and then, when selling their services to digital platforms, competed on things like price and functionality.
Some streaming services work with multiple aggregators but, as LyricFind explains in its Musixmatch lawsuit, many prefer to work with just one because “it is not practical or economical to integrate lyric data from multiple databases or switch among them”.
Musixmatch dominates that market, with LyricFind stating that its rival currently “services more than 80% of digital service providers by streaming volume and has agreements with six of the seven largest DSPs by global subscribers”. LyricFind, it then explains, “is the only significant global competitor to Musixmatch, servicing most of the remaining market”.
Because streaming services often work with one lyric aggregator they need that supplier to provide both data and licences for a large catalogue of songs, including those published by all three majors, which obviously includes the Warner Music publisher, Warner Chappell.
LyricFind says that, until March last year, it had enjoyed a fifteen year partnership with Warner Chappell which allowed it to include lyrics owned or part-owned by the major in its database and as part of its licences with the streaming services, on a non-exclusive basis.
But then Musixmatch entered into an “unprecedented” exclusivity deal with Warner Chappell, which means only Musixmatch can now provide and license lyrics controlled by the major.
This happened, LyricFind alleges, after Musixmatch learned that its biggest client, Spotify, was in advanced talks to switch its lyrics provider to LyricFind. Sufficiently advanced were those talks, the lawsuit explains, that Spotify “had undertaken and largely finalised the technological integration needed to switch from Musixmatch to LyricFind”.
“Rather than compete against LyricFind on the merits through lower prices and better services”, LyricFind then claims, “Musixmatch seized the opportunity to cement Musixmatch’s monopoly and extinguish the competitive threat posed by LyricFind once and for all”.
It did that by entering into the exclusivity deal with Warner Chappell, which means LyricFind now can’t provide Warner-controlled lyrics to its clients, and Spotify can’t even do a direct deal with the publisher to fill the Warner-shaped gap that now exists in LyricFind’s offering.
LyricFind notes that neither Musixmatch nor Warner announced the exclusivity deal, the implication being that that’s because they both knew it was a controversial move. Musixmatch also paid over the odds for the exclusivity deal, it’s alleged, because of the wider business benefits the exclusivity arrangement delivers by freezing out the competition.
The scheme, LyricFind says, “had the intended effect”. Its negotiations with Spotify collapsed, and the entire lyric aggregation market changed, meaning Musixmatch can now “charge unlawfully inflated fees”.
With WarnerChappel controlled songs removed from their databases, “LyricFind and other lyric service providers are no longer able to compete with Musixmatch” because they can’t provide lyrics or lyric licences for “approximately 30% of streams and around 60% of the top 100 songs, which are owned in whole or in part by Warner Chappell”.
Musixmatch’s conduct, reckons LyricFind, unlawfully removes competition from the lyrics licensing marketplace to the detriment of digital platforms, as well as independent publishers and songwriters. The lawsuit then sets out various alleged breaches of US competition law.
LyricFind’s accompanying statement is also keen to stress that Musixmatch is owned by private equity, while it was founded by three friends 20 years ago and “has taken no institutional investment”.
It also notes that Musixmatch “already requires independent artists and songwriters to pay for Musixmatch Pro in order to get their lyrics on Spotify and Instagram”, whereas “LyricFind has never charged artists for lyric distribution”. And now Musixmatch’s anticompetitive conduct, it alleges, is set to further disadvantage independent artists, writers and music publishers
Because, it says, “without competition, Musixmatch could potentially lower their royalty payments as much as they wish, as there will be no other option to get lyrics on to music streaming services”. And without an alternative for collecting lyric revenues, independent writers and publishers could see “earnings plummet”.