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Judge approves settlement in Lowery/Ferrick mechanical royalties case 

By | Published on Thursday 24 May 2018


A US judge has finally approved the proposed settlement in one of the highest profile of all the lawsuits filed in relation to the mechanical rights mess Stateside: ie Lowery & Ferrick v Spotify. That mess, of course, has resulted in many songwriters and music publishers not receiving all the royalties they are due when their songs are streamed via on-demand streaming platforms.

Most streaming services operating in the US have been on the receiving end of litigation in relation to unpaid mechanical royalties. America is unusual in that it doesn’t have a collecting society that can provide a blanket licence covering the so called mechanical rights in songs. Such licences, available in most other countries, mean that streaming services can ensure that they are fully licensed when it comes to song rights, relying on the blanket licence for any works not covered by direct deals with music publishers.

The lack of such a society and blanket licence in the US means that – while American copyright law sets the royalty rate for mechanical rights – each streaming service needs to identify what specific song rights it is exploiting and who controls those rights, and then make sure the relevant paperwork and payments are sent to the copyright owners. With no central publically accessible database of music rights linking recordings to songs and identifying current beneficiaries, that has proven to be a very tricky task.

It also meant that some songwriters and publishers went unpaid, resulting in litigation. Musicians David Lowery and Melissa Ferrick both put their names to class actions against Spotify in relation to unpaid mechanicals. Those two lawsuits were then later combined, with the streaming firm subsequently proposing a settlement deal that includes setting aside a fund worth $43.4 million to compensate songwriters and publishers whose songs it streamed without licence.

The basic terms of that settlement were agreed a year ago, but they needed court approval. Also, other members of the class – ie songwriters and publishers who were likewise unpaid by Spotify and who formally affiliated with this class action – had an opportunity to object to the deal. And some did.

Among those who objected was independent music publisher Wixen, which said that the proposed settlement was “procedurally and substantively unfair” and provided “an unfair dollar amount in light of Spotify’s ongoing, wilful copyright infringement of [our writer’s] works”. Though Wixen subsequently filed its own lawsuit in relation to unpaid mechanicals.

In her ruling this week, judge Alison Nathan overruled all those objections for various different reasons, concluding that the settlement agreement was “fair, reasonable and adequate”. She also ruled on legal fees, awarding the lawyers who worked on the case a few million less than they had been pushing for. Though they’ll still see $13 million for their efforts, so I wouldn’t worry too much about them.

Although other lawsuits in relation to unpaid mechanicals continue to go through the motions, the digital music sector hopes that these ongoing issues will be dealt with by the Music Modernization Act that is currently working its way through US Congress.

That legislation will finally introduce a collecting society and blanket licence for mechanicals in the USA. Which doesn’t necessarily mean the right songwriters and publishers will start receiving their royalties, but it will shift the responsibility for working out who needs to be paid away from the streaming services to the new society and the songwriters and publishers it represents.