According to the suit, instead of following legally established procedures for paying the mechanical royalties, Spotify engaged in "systemic and willful copyright infringement".
The settlement, which requires court approval, will end a year of litigation for the two suits, filed in January 2016 by Camper Van Beethoven lead singer David Lowery and singer-songwriter Melissa Ferrick. They alleged Spotify had chosen to "infringe now, apologize later" rather than go through the effort of fully licensing its music.
"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," Ferrick’s complaint stated. "Spotify's failure to properly obtain licenses is much more than what it euphemistically describes as an 'administration system' problem," Ferrick's alleged. "It is systemic and willful copyright infringement for which actual and statutory damages are the remedy."
Under the terms of the settlement, thousands of songwriters will share in the $43.5 million settlement fund as payment for Spotify’s past use of their material. Additionally, the fund will go towards establishing procedures to pay for mechanical royalties, which go to songwriters and publishers when compositions are recorded or reproduced.
The case is Melissa Ferrick et al v. Spotify USA Inc. et al., case number 1:16-cv-08412, in the U.S. District Court for the Southern District of New York.