It’s important to remember that David Lowery could have just sued Spotify over his own catalog. He didn’t do that. He brought a class action for the good of all songwriters who get overlooked and disrespected by Spotify and that’s a lot of people. I don’t know Melissa Ferrick, but I would bet the same could be said of her.
The plaintiff who can’t be bought off is a defendant’s worst nightmare. This is particularly true in David’s case because in addition to whatever money damages the class may be awarded, David is also asking for an injunction to require Spotify to bring in an independent third party compliance examiner to fix Spotify’s massive failure to identify copyright owners.
That injunction is probably more fear-inducing than whatever the payment might be, because that will once and for all fix the problem and eliminate the slush fund–or force Spotify to stop exploiting uncleared tracks. Make no mistake–unpaid royalties are a source of interest-free loans. While each songwriter may be owed a relatively small amount on average, when the service holds on to royalties they owe to thousands of songwriters, that can add up to millions of dollars.
Why do I think that Spotify is most afraid of someone they don’t control getting inside the company and looking under the hood? In Spotify’s motion to strike Lowery’s class action (and in the cut and paste job filed in Melissa’s case) Spotify’s lawyers say:
Next, Plaintiff wrongly contends that whether Spotify “made accurate royalty payments” is a common question [among class members]. To the contrary, that question could be answered, if at all, only on an individual song-by-song basis, and only after a detailed investigation into the streaming history and licensing circumstances of that song, as well as an accounting audit with respect to that song.
That task will be daunting—if not impossible—as it will require individualized inquiry into the royalty payments for each song.
Set aside how ludicrous it is to question whether getting stiffed on royalties is NOT a common question among the songwriters who got stiffed, the lawyers are right that it would require “a detailed investigation into the streaming history and licensing circumstances of that song, as well as an accounting audit with respect to that song.” But the Spotify lawyers are wrong about this: “That task will be daunting—if not impossible—as it will require individualized inquiry into the royalty payments for each song.”
That’s called a royalty compliance examination in the trade, sometimes shortened to an “audit”. Audits are neither “daunting” nor “impossible.” These audits happen all the time. In fact, they happen so frequently that the Harry Fox Agency has been conducting an audit of Spotify for several months now according to statements made by HFA representatives at the California Copyright Conference this week.
You may ask how could HFA be conducting an audit of a service for which it rendered outsourced song research and royalty accounting services. You may also ask, isn’t that HFA auditing itself? And these are questions you certainly should ask.
If HFA can audit Spotify, it sounds like what David is asking for is not “daunting–if not impossible” at all. It’s so possible that Spotify probably has already accrued a liability account to cover the HFA audit settlement payment to the songwriters represented by HFA’s publishers.
So let’s be clear–David is not in this to enrich himself. These positions are not those of someone who is looking for a quick payment. They are the positions of someone who wants to get to the truth.
And exactly what Spotify needs if they want to ever get out of the haunting treachery that Spotify have managed to smear all over themselves. Spotify should want what David wants–a court supervised examination of Spotify’s accounting practices. That’s the problem that Spotify has with plaintiffs like David and Melissa.
Because the question Spotify can’t answer is why they knowingly used the music without a license.
These plaintiffs want what’s right for everyone. And that’s a big problem for Spotify.