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Sweden’s Spotify hit by new $200 million action

Swedish music streaming leader Spotify has been hit by a new copyright lawsuit seeking $200 million, in the second such case within weeks.

Sweden's Spotify hit by new $200 million action
The Swedish company has been accused of adopting "a now familiar strategy for many digital music services -- infringe now, apologize later." Photo: Erik Mårtensson / SCANPIX

The lawsuits, each filed by individual artists in a US federal court in Los Angeles, ask a judge to create a class-action suit in which other alleged victims can collectively seek damages.

The latest lawsuit was filed Friday by Melissa Ferrick, the Massachusetts-based indie folk singer who teaches at the prestigious Berklee College of Music and rose to prominence as Morrissey's last-minute opening act on his 1991 tour.

Ferrick accused Spotify, which boasts of providing a massive selection of on-demand music, of failing to inform copyright owners when it created phonorecords, the files used to provide the instant music online.

Ferrick charged that the Swedish company, not wanting to delay its growth including its US launch in 2011, took “a now familiar strategy for many digital music services — infringe now, apologize later.”

“Spotify chose expediency over licenses. Thus, while Spotify has profited handsomely from the music that its sells to its subscribers, the owners of that music (in particular, songwriters and their music publishers) have not been able to share in that success because Spotify is using their music for free,” the lawsuit said.

Ferrick said that her songs have been streamed or temporarily downloaded one million times in the past three years over Spotify but said the company did not license them as required.

Ferrick's lawsuit sought at least $200 million on behalf of copyright holders from Spotify, a private company which says it has more than 75 million users and has been valued at $8 billion.

Spotify was hit in late December by another lawsuit seeking a class-action suit filed by David Lowery, the leader of alternative rock bands Cracker and Camper Van Beethoven who is also an academic.

Lowery, whose lawsuit sought at least $150 million, also accused Spotify of failing to seek permission for copying or distributing songs.

His lawsuit had a slightly different argument, accusing Spotify of ignoring mechanical rights — the permission to reproduce copyrighted material.

In response to Lowery's lawsuit, Spotify said it was trying to compensate every rights holder but that data was often missing.

“We are committed to paying songwriters and publishers every penny,” Spotify spokesman Jonathan Prince said at the time.

Spotify says it has paid back $3 billion to music-makers, has set aside money for future payouts and is working to find technical solutions to avoid future problems.

Streaming, both on Spotify and competing services such as Apple Music and Tidal, has been rapidly growing and contributed to a net rise in music consumption in the United States last year.

SPORT

Is football next for Spotify’s billionaire CEO? 

The owner of Spotify, Daniel Ek, has offered to buy Premier League club Arsenal amid supporter backlash against their unpopular American owner, Stan Kroenke.

Arsenal play to an empty stadium
Spotify's owner has set his sights on Arsenal. Photo: Adrian Dennis/AFP

Spotify’s billionaire CEO, Daniel Ek, who revolutionised on-demand music listening for millions of people now hopes to bring his business acumen to “the beautiful game”.

The 38-year-old, known for his no-nonsense attitude, has offered to buy Premier League club Arsenal amid supporter backlash against unpopular American owner Stan Kroenke.

Ek co-founded Spotify with Martin Lorentzon in 2006, and the company which made its debut on the New York Stock Exchange in 2018 now has a market capitalisation of $56 billion.

The Swedish billionaire 

Bald, bearded and usually seen in sneakers, T-shirt and a blazer, Ek is known for his reserved style and pragmatism. He’s a shy problem-solver with a creative streak who takes long walks to think things through and prizes collective teamwork over the individual.

Ek got into computer programming as a young child, and was a dollar millionaire by the age of 23 when he sold his online advertising company, Advertigo, in 2006 for a reported $1.25 million.

“But he’s more of a businessman than a tech nerd,” Sven Carlsson, co-author of “The Spotify Play”, told AFP, painting him as a visionary.

“He’s always thinking six months ahead. He’s not into the details. He’s known for having ambitious, lofty goals, with no understanding for how unrealistic they are,” he said.

“He thinks big, and he has patience” to see those projects through to fruition.

Ek was raised in Stockholm’s working-class suburb of Rågsved. His father left the family when Daniel was young.

“He’s always had something to prove… Being left by his dad was a formative experience,” Carlsson said.

Pelle Snickars, co-author of “The Swedish Unicorn: the Story About Spotify”, describes Ek as “quite Swedish in terms of values”.

“We don’t see him on magazine covers alongside celebrities, he’s not hierarchical and does not hesitate to showcase his collaborators,” Snickars told AFP.

With around 9 percent of Spotify’s capital and 37 percent of voting rights, Forbes put Ek’s fortune at an estimated $4.8 billion in April 2021.

“Innovations are never entirely new”

In 2006, Ek and Lorentzon came up with the idea of creating a platform to distribute music online legally, a practice that was dominated by illegal file sharing sites at the time.

The duo experimented with sharing MP3 music files between the hard drives on their computers. In October 2008 Spotify was finally ready to go live after Ek pleaded with music labels to open their catalogues.

“Innovations are never entirely new,” Ek told the Royal Institute of Technology (KTH) in Stockholm during a 2013 visit.

“The success comes from combining things that already exist and trying to solve a problem that one is really involved in,” he added.

Ek reportedly dropped out of the university’s engineering programme to pursue an IT career – though his enrolment at the school has never been proven, Carlsson noted.

He said Ek’s former colleagues nicknamed him “Spice.”

“They thought he always spiced up his stories a little to make them more interesting,” Carlsson said, adding that it wasn’t necessarily a bad thing.

“Storytelling is something Spotify and Daniel Ek have always been good at.”

Football next? 

Ek’s perseverance may have led to the remarkable rise of the start-up, but artists have over the years complained of it paying them too little and cannibalising sales from their albums.

Ek has repeatedly argued that streaming is a better alternative for artists and that “piracy doesn’t pay (them) a penny – nothing, zilch, zero.”

Snickars and co-author Rasmus Fleischer dispute the idea that Spotify was founded to end piracy and force consumers to pay for music.

They claim that neither Ek nor Lorentzon “had any experience with working professionally with music”, but they had a common background from digital advertising.

“They weren’t particularly interested in music…they could have worked on skin products instead,” Snickars told AFP.

Now, Ek is ready to dive into the football arena.

“As a kid growing up, I’ve cheered for Arsenal as long as I can remember. If KSE [Kroenke Sports Enterprises] would like to sell Arsenal I’d be happy to throw my hat in the ring,” Ek wrote on Twitter on April 23.

Kroenke has however insisted Arsenal is not for sale, despite growing supporter unrest at the American billionaire’s ownership of the club, whose last Premier League title came in 2003/04.

Article by AFP’s Pia Ohlin.

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