Music publishing house Wixen has filed suit against music app Spotify for $1.6 billion, on the grounds that the streaming service went only to the record labels who worked with the publishers in order to license music, rather than putting in the extra time, effort, and money to work individually with each of the publishers under all of the labels it licensed to reach a deal. Wixen represents a wide stable of artists and songwriters, including the likes of Neil Young, The Doors, and the late Tom Petty. While record labels own the master recording of songs by artists in their wheelhouses, publishers are technically responsible for radio play, streaming, and other reproduced performances, which means that Spotify going directly to record labels could give Wixen a case.
For the uninitiated, record labels handle studio time, producing and mastering a track, getting albums and singles squared away for sale, and marketing them. Publishers, meanwhile, handle concerts, radio play, usage rights, and other forms of reproduced playback. Since record labels technically own the masters of any music that they arrange studio time for, it is conceivable that they could hand those masters over to Spotify without publishers' involvement. Publishers, meanwhile, should theoretically handle streaming, according to the letter of the law. Essentially, Spotify reached deals with labels that did put some money back in publishers' and musicians' pockets, but many publishers have felt that those deals did not compensate them fairly, and went to court over it. When Wixen stands out here is that it's alleging that Spotify did not involve it in negotiations at all, and is essentially using its music without proper license.
Wixen is the latest, and as a representative of high profile musicians that allegedly represent somewhere between 1% and 3% of Spotify's revenue, one of the biggest entities yet to take Spotify to court. This news actually broke just before Spotify's official IPO announcement. The IPO itself was filed back in December, which means that it could be affected by this case in some way, or perhaps even held up entirely pending the resolution of the case, so that Spotify and its investors can see just what kind of impact, if any, this will have on the music service's value.