Spotify’s “Weird Lawsuits” and the Madness of Mechanical Licenses

Spotify’s “Weird Lawsuits” and the Madness of Mechanical Licenses

Spotify’s February filing to go public, which it did so on April 3, revealed some of the “weird lawsuits” it’s contending with. The Verge expertly summarized one of those cases and also deftly dug into the madness of mechanical licenses and overall complexity of copyright law.

The music publishing company Wixen Publishing sued Spotify to the, ahem, tune of $1.6 billion over mechanical licenses — “a legal regime that was created in reaction to the dire threat to the music industry posed by player pianos.” You are correct if you automatically visualized an old-timey piano eerily playing by itself in a saloon.

The short version of a mechanical license is that it’s a compulsory license that developed from composers of player piano music fighting for royalties — a fight that went from a 1907 case before the Supreme Court, which did not find in the group’s favor, to mechanical licenses being created as part of the Copyright Act of 1909. Mechanical licenses have remained intact, as music technology has evolved from player pianos all the way to digital downloads and some types of streaming, which The Verge notes is “delightfully labeled” as “phonorecord deliveries” in legal speak. Such licenses are automatic. There’s no negotiating between the streaming service and songwriters; the service only has to follow the rates of the Copyright Royalty Board, made up of administrative judges that meet every five years and decide on rates.

But, says The Verge, this license and its origin aren’t what make the lawsuit weird; it’s that Wixen is suing Spotify for not notifying songwriters in writing that they’re in the Spotify catalog. This doesn’t make any sense in our modern age of Spotify, Pandora and Apple Music adds The Verge.

“[T]he story of Wixen v. Spotify is not so much about paying the artists. It’s really a story about how, in a time when services, labels, and artists have never been better poised to work under a centralized, automated system for licenses and royalties, everyone keeps punching themselves in the face instead.”

The Verge goes on to characterize copyright law as “especially convoluted.”

“This is because as the technology around music has evolved over time, Congress and other legislative bodies around the world have chosen to tack on all kinds of little fixes to keep the whole thing going. There isn’t one copyright in one song — it’s four or five or six or really, a potentially unknowable number of rights scattered across the whole work.”

The article goes on to break down the complex nature of copyright law and how royalties are distributed. For example, there are rights for composition and sound recording, which are then subdivided. FM radio, SiriusXM and Spotify license rights to songs in completely different ways. And adding to the mind-boggling complexity are performance royalty organizations, most notably BMI, ASCAP, and SESAC, which use “some mysterious formula” to then redistribute royalties to their member artists.

Technological change has not been good for music copyright law. In fact, it’s suffered, says The Verge, because, with every new innovation, legislators have responded by patching it up, making it “increasingly untenable.”

Of note in this lawsuit summary is the Music Modernization Act, which was introduced earlier this year by Rep. Doug Collins (R-GA). It would create “a collection society that acts as the official middleman for mechanical licenses for digital services,” sets different mechanical rates for different songs based on market value and prevents lawsuits like Wixen v. Spotify. How? “If a streaming service sets aside the money it’s trying to allocate to a songwriter it can’t find, it can’t be sued later on for not finding the songwriter.”

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