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Spotify Ready to Rock, IPO and Lawsuit Done

By George Khoury, Esq. on July 03, 2018 | Last updated on March 21, 2019

The streaming music giant Spotify is poised to have a big summer. The company not only successfully went public a few months ago, but then in late May it settled the $1.6 billion dollar lawsuit against it for just over $100 million.

Though Bloomberg reported that the IPO was a bit of a non-starter, it was mostly due to the fact that those holding shares didn't actually want to part with them. Buyers were nervous initially due to the massive lawsuit, but that anxiety has largely eased now, and the company has seen some slight gains in its stock price.

Always Ready to Settle

Though there was quite a bit of uproar over the billion dollar lawsuit filed against Spotify, as well as other lawsuits relating to the company's failure to properly pay licensing fees, the streaming giant explained that the trouble was always that tracking down rights holders was not always possible. To make matters significantly better for the streaming service, it had been setting aside money in order to pay licensing fees when the rights-holders could be identified.

The $100 million settlement may be a far cry from $1.6 billion, but that amount proved to be more than enough to not only pay current class members in the action, but also to set aside more than half that to establish a fund for future payments as needed.

This level of foresight by Spotify is likely the reason why the company's stock has seen slight gains since its IPO.

Music Modernization Act

For companies in the music industry, and the attorneys that represent the companies and artists, the law may soon be changing to fit the times. The Music Modernization Act proposes a method by which music streaming services can avoid the multiplicity of lawsuits that keep getting filed related to mechanical licenses. The act would do so by creating a collective to establish a licensing clearinghouse or database that streaming services could refer to in order to make sure they properly pay licensing fees.

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