Culture

Spotify is being sued by a major music publisher for $1.6 billion

Spotify is being sued by a major music publisher for $1.6 billion”

Spotify is likely gunning to list in Q1, though Axios suggests a $1.6 billion music-licensing lawsuit that Wixen Music Publishing filed against the company in the past week may complicate the timeline and the overall IPO process.

By pursuing a direct listing, Spotify can skirt underwriting fees typically required for an IPO, though the move could hurt its shares because underwriters won't be evaluating or buoying the price. Apple CEO Tim Cook said in November that the service saw a 75 percent year-over-year increase in subscriptions.

Such lawsuits are detrimental to Spotify's plans on going public.

The Stockholm-based music company said it has paid $US5 billion ($6.4 billion) in revenue to music rightsholders (as of September 2016).

Wixen Music oversees tracks by artists including Neil Young, Tom Petty, Steely Dan's Donald Fagen, Stevie Nicks, The Doors, Weezer, Rage Against The Machine's Zach de la Rocha and Tom Morello, Dan Auerbach, Sonic Youth's Kim Gordon and more.

Spotify has filed with U.S regulators for an initial public offering in the first half of 2018 that would allow some long time investors - including record labels - to cash out.

The lawsuit, filed December 29 in a California federal court, alleges that Spotify is using tens of thousands of songs without a license to do so.

In May, Spotify settled a class action lawsuit with a group of songwriters for $43 million.

As of Wednesday no specific Spotify IPO date has been set. The lawsuit stats that Spotify didn't obtain the composition rights in their deals, and is seeking damages of $150,000 per songs, for over 10,000 songs.

To understand Wixen's grievance, it's important to distinguish between the music labels (the record companies) and the music publishers. In July, Spotify counted 60 million subscription-paying users worldwide, with 80 million more using its free tier.



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