Wixen Music Publishing, which handles titles by Stevie Nicks, Neil Young, Tom Petty and the Doors, among others, is suing Spotify, alleging that the company violated its copyright on more than 10,000 songs. This lawsuit could potentially alarm investors and lower the company’s market value.
With a $1.6 billion lawsuit clouding the company’s future, Spotify, one of the world’s largest music streaming service, has filed to go public. It listed its shares directly on the New York Stock Exchange without raising capital or issuing new shares, which would be the normal order of business. But it seems, under the circumstances, that Spotify is trying to save money on the underwriting fees that companies typically pay to investment banks when they hold an Initial Public Offering (IPO).
Under the Copyright Act, every recorded song has two separate copyrights: one for the sound recording where the revenue goes to the record label and one for the musical composition where the revenue goes to the publisher and songwriter. The lawsuit alleges that Spotify did not obtain the latter for 10,784 songs published by Wixen.
“Spotify has built a billion-dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licenses,” the Wixen lawsuit says.
Available in 61 countries, Spotify has a catalog of more than 30 million songs, 60 million paying users and 140 million total users. It was founded in 2008 in Sweden.