This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: Spotify faces a lawsuit over allegations that it “unlawfully” chose to reduce royalty payments to publishers and songwriters; Earth, Wind & Fire reaches a settlement over how much it’s owed in damages by an unauthorized tribute band; Elvis Presley’s granddaughter sues to protect Graceland from a “fraudulent” foreclosure; and much more.
THE BIG STORY: Spotify Taken To Court Over Royalties
Weeks after Billboard estimated that Spotify would pay roughly $150 million less to songwriters and publishers over the next year, the streaming giant is facing a legal battle over the move.
In a lawsuit filed last week, the Mechanical Licensing Collective (MLC) claimed Spotify had “unilaterally and unlawfully” chosen to cut its royalty payments nearly in half by “erroneously recharacterizing” the nature of its streaming services to secure a lower rate.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the MLC wrote. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
At issue in the lawsuit is Spotify’s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it’s now entitled to pay a discounted “bundled” royalty rate under federal law. But the MLC says Spotify’s interpretation is legally incorrect and represents a “clear breach” of its requirements under the law.
This is the second lawsuit of the past six months for the MLC — an entity created by Congress in 2018 to collect royalties under the Music Modernization Act. After the MLC filed a similar case against Pandora in February, that streamer argued that the group was supposed to operate as a “neutral intermediary” and was “not authorized to play judge and jury” or pursue “legal frolics.”
For the full breakdown of the new case against Spotify — including industry reactions and access to the full complaint filed in court — go read Kristin Robinson’s entire story here.
Other top stories this week…
TRADEMARK TRIAL AVERTED – Earth, Wind & Fire reached a settlement with a tribute act that used the R&B group’s name without permission, avoiding a looming trial over how much the unauthorized group would have to pay in damages. The agreement came months after a federal judge ruled that the tribute act — “Earth, Wind & Fire Legacy Reunion” — had infringed the band’s trademarks.
LIVE NATION CASE EXPLAINED – With an antitrust lawsuit against Live Nation from the U.S. Department of Justice expected soon, Billboard‘s Dave Brooks dove deep — breaking down the particulars of the looming case, explaining how it might affect Live Nation and recounting recent federal efforts to crack down on anti-competitive practices at tech giants like Google and Apple.
COURTHOUSE ROCK – Elvis Presley’s granddaughter Riley Keough filed a lawsuit aimed at blocking a “fraudulent” foreclosure sale of the late singer’s historic Memphis home Graceland. Keough’s lawyers say the sale foreclosure was triggered by phony claims that her late mother, Lisa Marie Presley, borrowed $3.8 million and used Elvis’ famed mansion as collateral.
UMG DROPPED FROM DIDDY CASE – Universal Music Group (UMG) and CEO Lucian Grainge were dismissed from a lawsuit claiming they “aided and abetted” Sean “Diddy” Combs in his alleged sexual abuse — a move that came after the lawyer who filed the case admitted there had been “no legal basis for the claims.” The sudden reversal came as UMG’s lawyers argued that the accusations were so “offensively false” that they planned to take the unusual step of seeking legal penalties directly against the accuser’s lawyer.
SAMPLE SETTLEMENT – Kanye West reached a settlement with the estate of Donna Summer to resolve a copyright lawsuit that accused him of “shamelessly” using her 1977 hit “I Feel Love” without permission in his song “Good (Don’t Die).” The case, filed in February, claimed that West “arrogantly and unilaterally” used her music even though he had been explicitly refused a license.
NAME GAMES – Members of the 1980s new wave band The Plimsouls won a legal ruling against the group’s guitarist over the trademark rights to the band’s name. The case was the music industry’s latest battle over the names of classic rock groups, including Journey, Stone Temple Pilots, Jefferson Starship, the Rascals, the Ebonys, The Commodores and The Platters.
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