People Aren't Getting Paid on Spotify's $43.5 Mln Class Action Settlement

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 happening.

Back in 2017, Digital Music News broke the story that 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.

The settlement was officially signed by a judge in 2018.  Now that the money is due in 2019, however, nobody seems to be getting paid.

According to sources speaking with DMN, the class action payout process is now riddled with problems.  Those include flat-out non-responses, major errors in matching ISRCs with actual recordings, and other logistical problems.  Jeff Price, founder of Audiam, part of SOCAN, told us that initial requests to match data and make claims were not receiving responses.  Even worse, the assigned claims administrator, a company named Epiq, seemed largely unaware that the claims process was underway.

Don’t blame Spotify, however.  Once the mattered was officially resolved, Spotify deposited $43.5 million into an interest-bearing escrow account, then walked away.  The rest was out of their hands.

So who’s hands is the matter with, exactly?  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. Somehow, those same attorneys don’t seem to be coordinating the details properly, however.

Price told us neither were responding to inquiries or taking any noticeable interest in the distribution process.

The non-responses and frustrations forced Jeff Price to directly email presiding judge Alison Nathan on October 18th.

“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 told us that the letter was mailed at a total last resort, after receiving zero response from any of the attorneys involved in the case.

“Please note, I am contacting you as a last resort,” the letter to judge Nathan continued.  “Prior to contacting you, I contacted all Plaintiff attorneys and all Defense attorneys about these issues 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 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 told DMN that since firing off that letter, he’s been able to actually 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.  And so the s—t show continues.

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 — good luck, dear friend.