Two years ago, independent songwriters and publishers agreed to a $43.5 million settlement with Spotify over unpaid mechanical licenses. Now, the payout process doesn’t seem to be working.
Back in 2017, Spotify had agreed to settle Ferrick et al. v. Spotify USA Inc., a massive copyright infringement lawsuit with independent songwriters and publishers. The out-of-court settlement allowed Spotify to close its case, avoid any claim of legal liability, and move on with its multi-billion-dollar public offering.
A federal judge officially signed the settlement in 2018. Now that the money is due in 2019, however, nobody seems to be getting paid.
According to information, the class action payout process is now riddled with problems. Those include flat-out non-responses, significant errors in matching ISRCs with actual recordings, and other logistical issues. Jeff Price, the founder of Audiam, part of SOCAN, said that initial requests to match data and make claims were not receiving responses. Even worse, the assigned claims administrator, a company named Epiq, seemed mostly unaware that the claims process was underway.
Don’t blame Spotify, however. Once the matter was officially resolved, Spotify deposited $43.5 million into an interest-bearing escrow account, then walked away. The rest was out of their hands.
Interestingly, the plaintiff’s lawyers in Ferrick v. Spotify received more than $13 million in fees after the settlement. Subsequently, the court-appointed Gradstein & Marzano, P.C., and Susman Godfrey L.L.P. as ‘Class Counsel’ to oversee the distribution process. Those same attorneys don’t seem to be coordinating any of the details, however.
Price told us neither was responding to inquiries or taking any noticeable interest in the distribution process. The claims seemed to go into a black hole.
The non-responses and frustrations forced Jeff Price to email presiding Judge Alison Nathan on October 18th directly.
“We are having problems with the administrator hindering our ability to complete our submission as a member of the class and were hoping you could help,” Price wrote.
“It is ten days since submission and we still have received no verification that (1) our file was received, (2) that the file was valid (3) communication in regards to when to expect the return file back (i.e., if it takes more than 6 weeks we miss the Dec 11th, deadline).”
Price said that the letter was mailed as a total last resort, after receiving zero response from the attorneys involved in the case.
“Please note, I am contacting you as a last resort,” the letter to judge Nathan continued. “Before contacting you, I contacted all Plaintiff attorneys and all Defense attorneys about these issues via email. I also emailed the provided email listed on the settlement website (no response), called the phone number listed on the settlement website (a voice-mail recording that did not deal address these issues), and contacted the Administrator (a company called Epiq) directly via phone at three of their different office locations (they stated they did not know anything about the Spotify Track-IDs and had no one for me to speak with).”
Price said that since firing off that letter, he’s been able to get responses. “The plaintiff’s attorney responded to what I wrote,” he said. But he’s only been able to match about 10% of the ISRCs in question.
So the s—t show continues — though people might now be getting responses and even some money. Let’s see.
For those trying to make a claim for mechanical royalties owed between December 28, 2012, and June 29, 2017, you have until December 11th to make a claim. The place to start is here.