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Spotify makes bold claims in countersuit against the American indie label it banned

By Chris Cooke | Published on Tuesday 19 May 2020

Spotify has hit back with some bold allegations as part of a long running battle with an American called Jake Noch and the music companies he founded. Noch went legal in the dispute last year, and in a countersuit filed yesterday Spotify claims that – while its foe calls himself a “musical prodigy” – he is, in fact, a “fraudster”.

Noch runs an independent label called Sosa Entertainment and also set up his own collecting society called PRO Music Rights. The former sued Spotify last year accusing the streaming firm of “unfair and deceptive practices” after it removed the label’s recordings from its service, leading to Sosa also losing its membership of indie label digital rights group Merlin.

PRO Music Rights, meanwhile, has made allegations of copyright infringement against pretty much every digital music service as a result of them not securing a licence from the performing rights society. It has also filed a competition law action with the courts in Connecticut involving pretty much all the streaming services and broadcasters of America.

The specific legal battle between Sosa and Spotify centres on the latter’s decision to remove the former’s content from its servers after accusing Noch of fraudulently manipulating streams of his label’s music on the Spotify platform.

He is basically accused of utilising the widely known scam whereby – because of the way streaming royalties are shared out each month – if you have enough accounts streaming your own music, you get a bigger slice of the digital pie when it is distributed to rightsholders.

Spotify says in its lawsuit: “Starting in 2016, Noch designed a scheme to artificially generate hundreds of millions of fraudulent streams on songs he had seeded on Spotify’s online music-streaming service. Noch’s objective was plain: to manipulate Spotify’s system to extract undeserved royalties at the expense of hardworking artists and songwriters”.

The streaming service claims that there were “blatant signifiers of artificial streaming” linked to tracks in Noch’s catalogue, including “highly irregular sudden spikes” in listening and “99% of streams coming from Spotify’s ad-supported service”.

The streaming company also claims to have written communications between Noch and a so called ‘bot farmer’ – a company that undertakes stream manipulation on behalf of other parties – in which, Spotify alleges, the Sosa boss “directed the creation of millions of fake Spotify accounts”.

Spotify then claims that its anti-fraud systems started to pick up on that activity, while the emails between Noch and the bot farmer came from a “whistleblower”.

“With the damning evidence of Noch’s ongoing fraud in hand, Spotify’s response was appropriately forceful”, the lawsuit goes on. “Spotify made Noch’s content unavailable for further streaming and eventually imposed a ban on all content associated with Noch to prevent his abuse of Spotify’s platform and the diversion of royalties from legitimate, hard-working artists”.

Spotify further alleges that Noch initially tried to circumvent its ban and then – last year – filed his legal action against the company. It is now filing a counterclaim, it adds, “to ensure that Noch’s fraud is not rewarded and to undo the harm caused by Noch’s misdeeds”.

The new legal filing also references the separate litigation pursued by PRO Music Rights. “Lately”, it claims, “Noch has been attempting to use the federal courts in his efforts to extract funds from legitimate businesses. In addition to the present suit, Noch’s fledgling performing rights organisation, PRO Music Rights, launched, and then quickly withdrew, ten copyright infringement actions in the Southern District of New York”.

“Noch asserted similar copyright infringement claims against Spotify in this action but backed down once Spotify exposed the claims as meritless”, it goes on. Meanwhile, “through PMR, Noch has also filed an antitrust action in the district of Connecticut, in which he lobs baseless claims against virtually the entire online streaming music industry for not taking a licence from PMR”.

For his part, Noch pre-empted many of the claims in Spotify’s new legal filing in his original lawsuit. Among other things, that litigation said that “Spotify fabricated a reason to remove Sosa’s songs from its platform”, that it “communicated false statements to Merlin about Sosa”, and that the streaming firm had “engaged in a widespread smear campaign” against Noch and his companies.

It now remains to be seen how he responds to Spotify’s formal allegations in the countersuit – and also to what extent the proceedings in this case impact on the competition claim on behalf of PRO Music Rights in the Connecticut courts.

Either way, it seems there could be some eventful chapters to come in this particular dispute.