California
05 June 2017
Reporter: Mark Dugdale
Spotify settles class-action claims
Spotify has pledged to set up a $43.4 million fund to compensate musicians and artists whose work the music streaming service used without paying royalties.

The fund will settle class-action suits brought by musician David Lowery and singer/songwriter Melissa Ferrick in December 2015, which claimed Spotify willfully infringed the copyright of thousands of musicians.

Those suits, which were later combined, were filed in the US District Court for the Central District of California. The court still needs to approve the settlement before it can go ahead.

Under the settlement, Spotify will use the $43.4 million fund to compensate musicians and artists whose work the music streaming service has used without paying royalties.

Music industry sources estimate that Spotify paid record companies $20 per user in 2015, but recordings uploaded to its system without the proper metadata leave many musicians and artists unpaid.

Some 112 million users of paid music streaming subscriptions drove year-on-year revenue growth of 60.4 percent in 2016, according to IFPI, also known as the International Federation of the Phonographic Industry, with Spotify and Apple Music leading the way in compensating artists for their music.

Those 112 million users generated $3.9 billion in revenue last year, making digital income responsible for half of the global recorded music industry’s annual revenue for the first time.

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